How has the king of buy-and-hold investment fared in China? Not bad, based on a bet Warren Buffett made a decade ago.
On Sept. 26, 2008, Berkshire Hathaway Inc. (BRK-B) agreed to buy what is now equivalent to 24.59% of BYD Co.’s Hong Kong-traded stock. Those shares in what is now China’s biggest maker of alternative-energy vehicles have soared more than 500% since then, turning a $232 million investment into a stake worth roughly $1.6 billion at current prices. Berkshire shares have rallied just 146% in the same 10-year period as of Tuesday’s close.
Buffett’s bet — made two years before Tesla Inc. (TSLA) listed and way ahead of the auto industry’s shift toward electric cars — has turned BYD (BYDDY) into the billionaire investor’s most-valuable holding in a publicly traded company based outside the U.S. The Chinese firm has weathered sharp swings in its share price and transformed itself from a maker of cell-phone batteries into a manufacturer of cars and monorails as China’s transport needs evolved.
“BYD has recorded rapid growth over the past decade,” the Shenzhen-based company said in a statement. “Mr. Warren Buffett’s unparalleled personal charm and practical action have provided strong support for BYD’s development.”
The gain made by BYD in the past decade is the fourth-largest in dollar terms among the 27 companies in the Bloomberg World Auto Manufacturers Index, behind China’s Geely Automobile Holdings Ltd., Tesla and Maruti Suzuki India Ltd.
And BYD isn’t Buffett’s largest windfall from China, where he is revered for his investment skill and has been dubbed the “God of Stocks” by state media. Berkshire made a profit of about $3.5 billion in 2007 from divesting its shares in PetroChina Co., having first disclosed investments in the energy producer of $488 million in 2003.