After 17 years, the conglomerate has sold its entire position, locking in extraordinary gains and raising new questions about how Buffett and his late partner Charlie Munger viewed both opportunity and risk in China.
From $230 Million to Billions: The BYD Story
Back in 2008, Berkshire Hathaway Energy (BHE), a subsidiary of Buffett's empire, invested $230 million to acquire 225 million shares of BYD. The move was championed by Charlie Munger, who famously described BYD's founder and CEO Wang Chuanfu as a "damn miracle."
At the time, the investment raised eyebrows. BYD was a relatively unknown Chinese automaker with big ambitions in batteries and electric vehicles. But Munger's conviction proved prescient. Over the years, BYD grew into one of the world's largest EV manufacturers, competing head-to-head with Tesla in China and expanding globally.
By mid-2022, Berkshire's stake had ballooned in value to nearly $9 billion, representing a gain of roughly 3,890%. It was one of the most profitable investments in Berkshire's long history of stock picking.
The Gradual Exit
Berkshire began trimming its BYD holdings in August 2022, selling into strength after the stock's sharp run-up. By June 2023, the company had sold about 76% of its position, reducing its ownership to just under 5% of BYD’s outstanding shares.
That threshold was important: under Hong Kong exchange rules, once Berkshire's stake fell below 5%, it no longer had to publicly disclose subsequent sales. For months, investors assumed Berkshire still held around 54 million shares.
But a sharp-eyed Buffett Watch reader noticed something unusual in Berkshire Hathaway Energy's Q1 2024 filing: the BYD investment was listed at zero value as of March 31. A Berkshire spokesperson later confirmed the obvious—the entire stake had been sold.
Why Did Buffett Sell?
Buffett has not provided a detailed explanation for the exit. In a 2023 interview with CNBC's Becky Quick, he praised BYD as an "extraordinary company" led by an "extraordinary person." But he added, "I think that we’ll find things to do with the money that I’ll feel better about."
That comment hints at two possible motivations:
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Portfolio reallocation: Berkshire may have simply decided to redeploy capital into opportunities closer to home or in sectors where it sees better long-term risk-adjusted returns.
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Geopolitical risk: Around the same time, Berkshire also sold nearly all of its Taiwan Semiconductor Manufacturing Co. (TSMC) stake—roughly $4 billion worth—just months after buying it. Buffett cited concerns about geopolitical tensions between China and Taiwan, calling it "a dangerous world."
Taken together, the moves suggest Berkshire is becoming more cautious about exposure to companies directly tied to China’s political and economic landscape.
The Munger Factor
It's impossible to tell the BYD story without mentioning Charlie Munger. The longtime Berkshire vice chairman, who passed away in 2023, was the driving force behind the original investment.
At Berkshire’s 2009 annual meeting, Munger defended the decision, saying that while it might look like he and Buffett had "gone crazy," he believed Wang Chuanfu's vision and execution were exceptional. Time proved him right.
The BYD stake became a case study in Munger's willingness to back unconventional ideas and Buffett's openness to trust his partner's judgment. The exit, coming after Munger's death, feels like the closing of a chapter in Berkshire's history.
What It Means for BYD
For BYD, Berkshire's exit is more symbolic than financial. The company is now a global EV powerhouse with a market cap in the hundreds of billions. While Buffett's endorsement gave BYD credibility in its early years, the company no longer needs Berkshire's backing to attract investors.
Still, the optics matter. Berkshire's complete withdrawal could raise questions among global investors about whether U.S. capital is becoming more cautious on Chinese equities, especially amid rising geopolitical tensions and regulatory uncertainty.
Buffett, Trump, and the Short-Termism Debate
Interestingly, Buffett's exit from BYD coincides with another debate in U.S. corporate governance—one where he and President Donald Trump find rare common ground.
This week, Trump posted on Truth Social that the SEC should allow corporations to report earnings every six months instead of quarterly. He argued that such a change would save money and allow managers to focus on running their businesses rather than chasing short-term targets.
Buffett has long voiced similar concerns, though with an important distinction. He has urged companies to stop issuing quarterly earnings-per-share guidance, which he believes encourages short-term thinking and discourages investment in long-term growth.
In a 2018 Wall Street Journal op-ed co-written with JPMorgan Chase CEO Jamie Dimon, Buffett argued that quarterly guidance often leads companies to cut back on research, hiring, or capital spending just to meet near-term forecasts. "Financial markets have become too focused on the short term," they wrote, calling quarterly guidance "a major driver of this trend."
However, Buffett and Dimon stressed they are not opposed to quarterly reporting itself. They believe companies should continue to provide transparent quarterly and annual results, but without speculative forecasts that can distort decision-making.
The Bigger Picture: Long-Term Thinking in a Risky World
Buffett's BYD exit and his views on corporate reporting both reflect a consistent philosophy: focus on the long term, avoid unnecessary risks, and don’t get distracted by short-term noise.
- In BYD's case, Berkshire enjoyed a 17-year run of extraordinary gains but ultimately decided the risks outweighed the rewards of staying invested.
- In corporate governance, Buffett continues to push for practices that encourage sustainable growth rather than quarter-to-quarter maneuvering.
Both themes underscore why Buffett remains one of the most closely watched investors in the world. His moves are never just about the numbers—they're about philosophy, discipline, and risk management.
Investor Takeaways
For investors, Berkshire's BYD exit offers several lessons:
- Don't be afraid to take profits. Even the best companies can become risky investments if the geopolitical backdrop shifts.
- Trust long-term conviction. Munger's early call on BYD looked risky at the time but delivered nearly 40x returns.
- Stay flexible. Buffett's willingness to change course—whether on BYD or TSMC—shows that even legendary investors reevaluate when conditions change.
- Think beyond the quarter. Whether you agree with Trump or Buffett on reporting frequency, the broader point is clear: chasing short-term numbers can undermine long-term value creation.
The Bottom Line
Berkshire Hathaway's complete exit from BYD closes one of the most profitable chapters in its investing history. What began as a bold bet on a little-known Chinese automaker turned into a multi-billion-dollar windfall.
The decision to sell reflects not a lack of faith in BYD's business, but a broader recalibration of risk and opportunity in an uncertain world. At the same time, Buffett's ongoing push against short-termism in corporate America highlights his enduring belief in patience, discipline, and long-term value.
For investors, the message is timeless: extraordinary gains are possible when you back extraordinary companies—but knowing when to walk away is just as important as knowing when to buy.