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PHOTO CAPTION: MidAmerican CEO David Sokol with BYD Chairman Wang at 2009 Detroit Auto Show.

Berkshire Hathaway Earns $1Billion Paper Profit on BYD Investment

The automaker has jumped fivefold in Hong Kong trading since the deal was announced on Sept. 27, 2008.

Published: 31-Jul-2009

OMAHA, NE -- Warren Buffett’s Berkshire Hathaway Inc. earned a $1 billion paper profit from an investment it agreed to make in Chinese carmaker BYD Co. less than a year ago.

The automaker has jumped fivefold in Hong Kong trading since the deal was announced on Sept. 27, helped by Buffett’s investment and rising demand for fuel-efficient vehicles. Three days earlier Berkshire agreed to an investment in Goldman Sachs Group Inc. that has since generated a paper profit of about $2 billion.

“When Warren Buffett says the sun shines out of somebody’s backside, it’s worth paying attention,” said Guy Spier, principal at New York-based hedge fund Aquamarine Funds LLC, who owns Berkshire shares and has researched BYD. Buffett is “betting on the jockey in this case,” Spier said, referring to BYD’s Chief Executive Officer Wang Chuanfu.

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