Buffett Fund Earns $1 Billion From $230 Million, 10-Month Investment in BYD
By Scott Doggett July 31, 2009
Berkshire Hathaway, a conglomerate holding company chaired by Midwestern moneyman Warren Buffett, has earned $1 billion in paper profits on $230 million the company agreed to invest in Chinese electric-vehicle maker BYD only 10 months ago.
On Thursday, the China Securities Regulatory Commission granted approval for the transaction, which gave Berkshire a 9.89 percent stake in BYD. The company's shares closed today at HK$42.90, valuing Berkshire's stake at HK$9.65 billion, or about $1.25 billion.
As we reported last September, Buffett's MidAmerican Energy Holdings, a unit of Berkshire Hathaway, paid $230 million for a 10 percent interest in BYD (Build Your Dreams), reportedly to help push the Chinese company's environmentally friendly automotive technologies.
Since then, shares in the Chinese car and battery maker quintupled.
Berkshire agreed to the stake in BYD three days after deciding to buy $5 billion of Goldman Sachs Group Inc. preferred shares, despite the then-pervasive market turmoil after Lehman Brothers Holdings Inc.'s bankruptcy.
Warrants attached to the Goldman investment have since generated a $2 billion paper profit for Berkshire.
Buffett is the world's second-richest person, after Microsoft Corp. co-founder and Berkshire director Bill Gates, according to Forbes magazine.
Founded in Shenzhen in 1995 as a maker of rechargeable batteries, BYD expanded into mobile phones and electric and hybrid automobiles such as the one pictured above.
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