Monday, August 31, 2009

China's BYD says Buffett wants to raise stake (BRK.A: 1211.HK)

You see all the bitchin' about BRK's stance on cap-and-trade* from some quarters (mainly à gauche) with nary a mention that the MidAmerican subsidiary has the largest utility-owned wind operation in the country, runs 17,000 miles of natgas pipeline, operates substantial hydro capacity through the Pacificorp sub. and in their role as one of the world's three largest reinsurance companies and through various insurance subsidiaries, including GEICO has an extraordinary property/casualty exposure. As this story points out they also own a fair chunk of battery and vehicle co., BYD.

I'd have to guess that Warren and Charlie understand the economics of climate better than the punditocracy. They also know more about traders and trading. This knowledge might be what informs their thinking on cap-and-trad.

From Reuters:

* BYD expects to sell electric car in US in 2010

* BYD keen on mainland A-share listing, maybe in the next yr

* Multinational automakers in talks to buy BYD batteries

* Shares close up 8 pct in weak HK market (Adds details and analyst comments)

By Joanne Chiu

HONG KONG, Aug 31 (Reuters) - U.S. billionaire Warren Buffett intends to raise his stake in Chinese electric car and battery maker BYD Co Ltd (1211.HK), BYD's chairman said on Monday, sending shares in his company up 8 percent.

MidAmerican Energy Holdings, a unit of Buffett's Berkshire Hathaway (BRKa.N), bought 10 percent of BYD for $230 million or about HK$8 a share last September, sparking a massive rally in the stock. [ID:nN26317503]

"MidAmerican has always intended to raise its stake in BYD because it believes BYD has good prospects in the development of renewable energy, but we are still considering (whether to sell more)," BYD Chairman Wang Chuanfu told reporters on Monday.

BYD, Hong Kong's largest listed auto stock, also said it expects to sell its e6 electric car in the United States in 2010, a year ahead of schedule.

"BYD shares are not cheap at the current price level, but since the company's strategy is in line with Beijing's policy, and with the support of Buffett, the market is willing to pay a premium for that," said Ben Kwong, the chief operating officer of KGI Asia.

China's government has been encouraging local automakers to focus on more fuel efficient models and environmentally friendly technologies.

BYD shares rose 8 percent to close at HK$48.6 on Monday, more than six times what MidAmerican paid and valuing the company at about $13 billion. The benchmark Hang Seng index .HSI fell 1.9 percent.


BYD has ambitious plans for its hybrid and rechargeable electric vehicles, aiming to sell as many as 9 million units by 2025 to take on heavyweights like General Motors [GM.UL] and Toyota Motor Corp (7203.T)....MORE

*Here's one example:

"Why Warren Buffett Is Wrong About Cap and Trade: Eric Pooley" (BRK.A)

There are others. Here's a quick overview of the Berkshire/MidAmerican position:

** Berkshire Hathaway's Munger on Cap-and-Trade ("Monstrously Stupid Right Now...Almost Demented"); Warren and Charlie on Wind and Solar (BRK.A)

Warren Buffett on Cap-and-Trade (BRK.A)

Berkshire Hathaway's MidAmerican Energy on Waxman-Markey: "We Don't Much Care For It" (BRK.A)

UPDATE-- "Sokol: Markey seeks to intimidate" (BRK.A)

Climateer Investing on Carbon Trading and Traders