Traders rushed to sell BYD (1211) after Warren Buffett's Berkshire Hathaway trimmed its stake in the Chinese electric vehicle maker, fearing that the legendary investor may be gearing up for an eventual exit after more than a decade as the company's most notable backer.
BYD shares plunged 7.9 percent in Hong Kong yesterday, the most in seven weeks and the worst performance on the benchmark Hang Seng Index. .
The selling followed Berkshire's filing to the exchange late Tuesday notifying that the firm reduced its holding of BYD's Hong Kong-listed shares to 19.92 percent from 20.04 percent on August 24.
Speculation has been swirling for weeks about Buffett's intentions, ever since a 20.49 percent stake - identical to the size of Berkshire's last reported BYD position as of December - entered Hong Kong's Central Clearing and Settlement System in July, a move that is often seen as a precursor to share sales. BYD stock has fallen about 25 percent from a July high.
"Investors could interpret this as the beginning of Berkshire closing its position in BYD," said Bridget McCarthy, an analyst at hedge fund Snow Bull Capital "I would expect arguably one of the world's greatest investors to take some profits after over a decade, especially on his highest-returning investment, percentage-wise."
