Reason Buffet reduced BYD stakes to buy TSMC
$BYD COMPANY(01211)$ shares were cut again by Warren Buffett, according to the HKEx announcement on Jan. 9. On Jan. 3, Berkshire Hathaway-B.US reduced its stake in BYD H shares for the seventh time this year, selling about 1.06 million shares of BYD and reducing its stake to 13.97%.
Warren Buffett reduced his holdings by 1.33 million shares from August 24, 2022, cashing out $368 million, until January 3, 2023, when he reduced his holdings by 1.058 million shares, cashing out $200 million. Based on the calculation as of January 10, 2023, Warren Buffett reduced his holdings of BYD shares seven times, with a total of 17.736 million shares, cashing out a total of $3.615 billion and reducing his holdings from 20.04% to 13.97%, a total reduction of 6.07%.
I think it is reasonable to believe that BYD's development has almost reached a bottleneck and the stock price seems to be difficult to break through, mainly due to the epidemic and weak consumer power. US will reduce the price of the Mdoel 3 and Y models at the same time, which will lead to pressure on sales, coupled with geopolitical risk issues, Chinese stock audits, etc. Based on the above reasons, Buffett is concerned about the reduction of profits from BYD's investment and the frequent cash out situation.
Buffett's main goal is to hold cash, followed by buying $Taiwan Semiconductor Manufacturing(TSM)$ in batches, because TSMC has unlimited development potential under the influence of the U.S. Chip Act. The main reason for Buffett to switch to TSMC after reducing his stake in BYD. I think Warren Buffett will continue to reduce his holdings in BYD and continue to buy TSMC, and may even invest in Tesla in the future.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
👍🏻