Buffett's Appetite for China Not Suppressed
China, in particular, has been a popular destination. In 2009, Buffett spent HK$2 billion to purchase a 10% stake in the battery maker-turned-electric car manufacturer, BYD. Thanks to China's blossoming middle class and the wild initial success of models like the F3, BYD shares surged following his investment. For Buffett, this dramatic ascension translated into dollar signs. Less than a year after his purchase, media sources reported that it had earned Buffett USD$1 billion. BYD was shaping up to be yet another success story for the Berkshire Hathaway (BRK.A) chairman.
Buffett continues to be in the money with his Chinese electric car company. However, in recent years, the mood surrounding BYD has soured dramatically. With issues like declining sales, product delays and land disputes weighing heavily, the company's share price has stumbled along a steady downward path, since peaking around October 2009.
Although the downturn has been dramatic, the pain may not be over. This week, Bloomberg reported that BYD was taking an axe to its first-quarter profit forecasts, paring estimates by as much as 95%. The report notes that the growing Chinese presence of competing car manufacturers like General Motors (GM) is largely to blame for the company's weakened expectations.