Berkshire Hathaway’s Shrewd Exit: The BYD Investment That Paid Off Beyond Imagination

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Some years ago, Warren Buffett, that most venerated of financial prophets, declared with his customary zeal, “Our favorite holding period is forever,” when speaking of businesses led by exceptional management. A charming sentiment, if one could ignore the persistent noise of changing markets and the occasional misstep by the Oracle of Omaha himself. For despite his many triumphs, Buffett’s portfolio has, on occasion, proven that even a legendary investor might misjudge the value of holding too tightly to certain stocks. One such occasion came when Berkshire Hathaway, once flush with confidence, sold its stake in a company that had, in its own awkward fashion, proved itself a giant of the electric vehicle world.

From the very outset of his investing career, Buffett’s strategy has been centered around ownership of “outstanding businesses,” with little regard for the passing market whims. Yet, even the most astute investor must recognize when a once-prized asset has become overinflated, or when, as is sometimes the case, the portfolio grows so large that even the most successful of investments needs pruning. It is this fine art of pruning-often with surgical precision-that has led to the recent divestments in Berkshire Hathaway’s portfolio. In fact, for the past 11 quarters, the company has sold more equities than it has purchased. Indeed, when one considers the story of BYD, one cannot help but wonder if the decision to sell was yet another manifestation of the age-old adage: “It’s better to be lucky than good.”

As far as fortuitous decisions go, however, few could rival the choice made in September 2008, when, amidst the wailing of financial markets torn apart by the Great Recession, Buffett and his ever-observant right-hand man, Charlie Munger, made a bold investment in the Chinese electric vehicle maker, BYD. At the time, this company, led by the somewhat enigmatic CEO Wang Chuanfu, was little more than an unknown entity to the Western world. And yet, Munger, ever the contrarian, was taken with the company’s promise, and soon enough, Berkshire Hathaway owned a 10% stake. Over time, this would swell to 20%, and in the years that followed, BYD would not only prosper, but emerge as the largest electric vehicle manufacturer in the world, a position it would claim with a rather unflattering nonchalance.

How unseemly that the once sleepy BYD would triumph in a sector as flashy as electric vehicles. But triumph it did. By the end of 2023, BYD’s electric vehicle sales had surpassed those of Tesla, and by April 2024, the company was selling more cars in Europe than its more storied American rival. Yet, even as it expanded its global footprint, BYD chose to avoid the highly politicized and tariff-laden American market, perhaps wisely. The irony, of course, is that this success came at a time when many in the West were beginning to question the very notion of “globalization” as their own markets turned inward.

The returns were nothing short of spectacular. Since 2020, BYD’s stock price had soared to an astronomical height, gaining more than eight times its value. This, of course, was the moment at which Buffett, with his customary blend of opportunism and discretion, began to reduce Berkshire’s stake, having already seen the value of the investment appreciate some twenty-fold. One could almost hear the rueful chuckle as Buffett realized that the BYD investment, like many others, had simply grown too large, too complicated, too… excessive.

But the tale of BYD, as with so many great stories, has its complications. In recent months, the company has faced significant headwinds from domestic Chinese competitors, whose own electric vehicles are slowly eroding BYD’s once-unassailable market share. Deliveries have stalled. Margins have compressed. The fall from grace, though less dramatic than in the world of celebrity, has been steady. And yet, in an elegant twist, BYD’s vertical integration-its capacity to manufacture everything from batteries to semiconductors-has allowed it to retain an advantage over competitors who must scurry for components like scavengers in the marketplace. And though its prospects have dimmed somewhat, the company’s continued international expansion may yet provide a safety net. After all, as any good investor knows, the market is a fickle mistress, forever offering opportunities for those who know where to look.

Yet, what most piques the interest of any value investor is not the day-to-day fluctuations of the market, but the underlying price at which an asset can be purchased. With BYD’s stock now trading at just one times sales and less than 16 times projected earnings, the company is undeniably undervalued, especially when compared to the increasingly pricey Tesla. It is this discrepancy between price and value that warrants a careful reconsideration of the company’s long-term prospects. While Buffett may have opted to walk away from BYD, the stock still possesses the qualities that make it a worthy contender for those willing to stomach the uncertainties of a fast-evolving industry.

In truth, Berkshire Hathaway’s divestment is less a sign of BYD’s decline than a subtle acknowledgment of the ever-changing nature of the investment landscape. As for Buffett, well, one imagines he has moved on to his next venture, his interests already diverted elsewhere. In the end, as with most of Buffett’s grandest plays, the result was always inevitable. It is the nature of great men to leave their footprints on the sands of time-and on their way out, to leave others to ponder the merit of their departures.

Perhaps in the end, the value investor must concede: not every opportunity is eternal. And some-no matter how tantalizing-are best left to others. 🌱

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2025-09-28 19:37