Warren Buffett.
Bill Pugliano / Getty
SoftBank, Naspers, and Warren Buffett’s Berkshire Hathaway are selling Chinese tech stocks.
The trio have been cutting their respective stakes in Alibaba, Tencent, and BYD.
Berkshire has sold about $600 million of BYD stock, while SoftBank anticipates a $34 billion profit.
Some of the world’s best investors are cashing out 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 plowed $232 million into BYD in 2008, securing a stake in the Chinese electric-vehicle maker worth nearly $10 billion in June. However, the famed investor’s company has sold about 8% of its position for around $600 million over the past two months, netting a roughly 35-fold return on its money.
Buffett’s business partner, Charlie Munger, and one of the pair’s close associates, Li Lu, have pared their bets on BYD over the past 18 months. They have pocketed several times what they 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 still owned about 24% of the Chinese e-commerce titan — a stake worth over $200 billion in October 2020 (the stock has plunged by 70% since then).
Son’s company is in the process of slashing its Alibaba stake to about 15%, and expects to realize a $34 billion gain, a SoftBank executive told the Financial Times in August.
Meanwhile, Naspers invested $32 million in Tencent for 45.6% of the WeChat owner in 2001. The South African tech company’s Prosus subsidiary still owns close to 30% of the Chinese media giant — a stake valued at north of $100 billion today.
However, Prosus declared in June that it would pare its position, and listed a hefty $7.6 billion worth of Tencent stock on the Hong Kong Stock Exchange’s clearing system this week. The Dutch company confirmed that it plans to dispose of those shares.
Buffett, Munger, and Li haven’t offered any explanation for their BYD sales. Prosus is selling Tencent shares to finance stock buybacks, while SoftBank slashed its Alibaba stake to shore up its balance sheet.
Regardless, it’s safe to say all of these investors want to realize some of their massive gains on Chinese stocks before they potentially disappear. After all, Alibaba, BYD, and Tencent shares have all slumped sharply this year, and the outlook for Chinese tech companies has darkened in recent years.