(Yicai Global) Aug. 31 -- BYD said a decision by Warren Buffett’s investment company to pare its stake in the Chinese electric carmaker is normal market behavior, and there is no need to over-interpret the move. BYD is operating normally, it added.

Hong Kong Exchanges and Clearing said on its website yesterday that Berkshire Hathaway sold 1.33 million shares of Shenzhen-based BYD on Aug. 24. This is the first time in 14 years that Buffett has publicly reduced his holdings. BYD’s shares fell sharply on the news.

BYD [SHE: 002594] slumped 7.4 percent in Shanghai today to close at 287.98 (USD41.76). Its Hong Kong-listed stock [HKG: 1211] plunged more than 10 percent at one point before closing down 7.9 percent at HKD 242.20 (USD30.86).

Berkshire Hathaway earned HKD369 million (USD47 million) from selling the stock and now has 218.719 million shares in BYD, or 19.92 percent of the automaker’s outstanding shares, with voting rights, per information from the Hong Kong exchange.

It is probably not the first time that Buffett has sold his stake in BYD. Berkshire Hathaway had 225 million shares in BYD at the end of June, the EV giant’s recently-released first-half earnings report showed. But Berkshire has 218.719 million shares in BYD, according to the HKEX, 6.281 million fewer than the figure released by BYD.

According to HKEX rules, a firm needs to disclose a stake cut by its major shareholder only when the reduction causes the shareholder’s stake to drop below a certain percentage. This is why BYD announced the cut of 1.33 million shares only.

The stake cut will not have a big impact on BYD, and its shares are likely to fluctuate in the short term, Wen Tianna, president of Partners Capital International, told Yicai Global.

The new energy vehicle maker released its first-half financial report on Aug. 29. It posted CNY150.6 billion (USD21.8 billion) in operating revenue, up 66 percent from a year ago, and CNY3.6 billion in net profit, a 206 percent leap.

Rumors had it last month that Buffet would cut his holdings in BYD, causing the firm’s stock price to fall sharply. A total of 225 million BYD shares on the Hong Kong stock market were transferred to Citibank on July 11, making up 35.39 percent of the firm’s total shares, HKEX data showed on July 12. Based on the number of shares, market insiders speculated that the seller was probably Berkshire Hathaway.

Berkshire Hathaway bought 225 million shares of BYD on the Hong Kong market for HKD1.8 billion (USD229.4 million) or HKD8 (USD1.02) apiece on Sept. 29, 2008. After holding the shares for more than 14 years, it will have earned a profit of more than 33 times based on BYD’s average stock price of HKD277 (USD35.3) per share.

Editor: Peter Thomas