Speculations Over Warren Buffett Selling Stake Leads To 11% Slump In Auto Stock

Shares of Chinese automotive giant BYD Co. Ltd BYDDF BYDDY sank as much as 11% during the trading session in Hong Kong on Tuesday after reports surfaced that Warren Buffett’s Berkshire Hathaway Inc BRK (NYSE: BRK-B) may be adjusting its holding.

What Happened: According to Bloomberg, a stake matching the size of Berkshire's position in BYD appeared in Hong Kong’s clearing system, fueling speculation that the billionaire might be pairing his stake in the company.

As of Monday, the Hong Kong exchange data showed that a 20.49% stake — identical to Berkshire’s last reported holding in Hong Kong as of December — entered the Central Clearing and Settlement System of the stock exchange.

Steven Leung, executive director at UOB Kay Hian in Hong Kong, told Bloomberg that “only Berkshire would have that many shares as a single investor, so the market is worried Buffett is planning to sell.”

There can be several reasons behind a stake appearing in Central Clearing and Settlement System; such moves are usually considered precursors to sales as the shares must enter the system before settling transactions.

Buffett has given no indications that he planned to adjust Berkshire's position in BYD but the possibility of the celebrity backer paring his stake in the company was enough to plummet the stock.

Price Action: The Hong Kong-listed stock of BYD plunged nearly 11% during the trading session on Tuesday, while the Shenzhen-listed stock fell about 5%. According to data from Benzinga Pro, OTC shares of BYD closed 5.79% lower in the U.S. on Monday.

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