SoftBank, Naspers, Buffett’s Berkshire Sell Chinese Technology Stocks

  • Warren Buffett’s SoftBank, Naspers and Berkshire Hathaway are selling Chinese technology stocks.
  • The trio has cut their respective holdings in Alibaba, Tencent and BYD.
  • Berkshire has sold about $600 million worth of BYD stock, while SoftBank expects profits of $34 billion.

Some of the world’s top investors are cashing in on their iconic bets on technology stocks from China, in the face of tightening regulations, disruptive COVID-19 lockdowns and mounting economic challenges in the country.

Warren Buffett’s Berkshire Hathaway put $232 million into BYD in 2008 and acquired a nearly $10 billion stake in the Chinese electric vehicle maker in June. However, the famed investor’s company has sold about 8% of its position in the past two months for about $600 million, yielding about a 35-fold return on its money.

Buffett’s business partner, Charlie Munger, and one of the couple’s closest associates, Li Lu, have lowered their bets on BYD for the past 18 months. They have several times pocketed what they have invested.

SoftBank CEO Masayoshi Son, who modeled his technology conglomerate on Berkshire, invested $20 million in Jack Ma’s Alibaba in 2000. Until recently, SoftBank owned about 24% of the Chinese e-commerce giant — a stake worth more than $200 billion in October 2020 (its share has since fallen 70%).

Son’s company is cutting its stake in Alibaba to about 15% and expects to realize a profit of $34 billion, a SoftBank executive told the Financial Times in August.

Meanwhile, in 2001, Naspers invested $32 million in Tencent for 45.6% of the WeChat owner. The South African tech company’s Prosus subsidiary still owns nearly 30% of the Chinese media giant — a stake today valued at north of $100 billion.

However, Prosus stated in June that it would reduce its position and this week listed a hefty $7.6 billion worth of Tencent shares on the Hong Kong Stock Exchange’s clearing system. The Dutch company has confirmed that it intends to sell those shares.

Buffett, Munger and Li have not provided an explanation for their BYD sales. Prosus is selling Tencent shares to fund share buybacks, while SoftBank lowered its stake in Alibaba to bolster its balance sheet.

Either way, it’s safe to say that all of these investors want to realize some of their massive gains on Chinese stocks before potentially disappearing. After all, shares of Alibaba, BYD and Tencent have all fallen sharply this year and the outlook for Chinese tech companies has deteriorated in recent years.

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