* BYD investment quintuples over 10 months
* Buffett eyes international growth
By Jonathan Stempel
NEW YORK, July 31 Warren Buffett's Berkshire
Hathaway Inc (BRKa.N) (BRKb.N) has realized a $1.02 billion
paper profit on a 10-month-old investment in BYD Co (1211.HK)
after shares in the Chinese car and battery maker quintupled.
Berkshire's MidAmerican Energy Holdings Co unit had agreed
last Sept. 26 to buy 225 million BYD shares at HK$8 each, a
transaction then worth about $230 million.
The China Securities Regulatory Commission on Thursday
granted approval for the transaction, which gives Berkshire a
9.89 percent stake. BYD shares closed Friday at HK$42.90,
valuing Berkshire's stake at HK$9.65 billion, or about $1.25
Hong Kong's benchmark Hang Seng index .HSI is up 10
percent since Berkshire revealed the BYD investment.
Berkshire agreed to the stake three days after deciding to
buy $5 billion of Goldman Sachs Group Inc (GS.N) preferred
shares, despite the then-pervasive market turmoil after Lehman
Brothers Holdings Inc's LEHMQ.PK bankruptcy.
Warrants attached to the Goldman investment have since
generated a $2 billion paper profit for Berkshire.
"Buffett has grown more comfortable investing in foreign
companies in recent years," said Andy Kern, who writes the blog
Berkshire Ruminations and is a doctoral candidate at the
University of Missouri-Columbia.
"Domestically, Buffett is taking advantage of Berkshire's
solid capital position," he added, "while internationally, it's
more that Buffett is simply finding bargains."
Other non-U.S. investments by Berkshire include the
reinsurer Swiss Re RUKN.VX and the South Korean steelmaker
Earlier this decade, Berkshire made a few billion dollars
on what had been a $488 million investment in Chinese oil
company PetroChina Co (601857.SS).
Buffett is the world's second-richest person, after
Microsoft Corp (MSFT.O) co-founder and Berkshire director Bill
Gates, according to Forbes magazine.
Founded in Shenzhen in 1995 as a maker of rechargeable
batteries, BYD expanded into mobile phones and automobiles.
It expects to sell 400,000 vehicles this year, and targets
the sale of as many as 9 million by 2025, according to Henry
Li, general manager of BYD Auto's export arm. [ID:nHKG366761]
BYD Auto launched its first plug-in hybrid vehicle, the F3
DM sedan, last December.
Berkshire, based in Omaha, Nebraska, is a roughly $150
billion conglomerate that has close to 80 businesses selling
such things as car insurance, ice cream and underwear, and
which invests in dozens of companies.
Analysts on average expect Berkshire on August 7 to report
a decline in second-quarter operating profit. Net income and
Berkshire's book value may grow if rising stock markets boost
the value of Berkshire's derivatives contracts.
Berkshire Class A shares were up $305 at $97,100 in morning
trading on the New York Stock Exchange.
(US$1 = HK$7.75)
(Additional reporting by James Pomfret and Joanne Chiu in
Shenzhen; Editing by Steve Orlofsky)