We don't know for sure why Warren Buffett's Berkshire Hathaway has been reducing its stake in PetroChina, but he's been selling more shares than you might have thought.
Reporting of the most recent disclosed sale, including the previous post here on Warren Buffett Watch, describe it as the third sale since July. That's because there have been three filings with the Hong Kong Stock Exchange since July disclosing sales:
- July 12 filing: Sold 17 million shares worth about $27 million
- Sept. 1 filing: Sold 93 million shares worth about $136 million
- Sept. 11 filing: Sold 28 million shares worth about $40 million
Add them together and you have roughly 138 million shares with a value of $203 million.
But Investors Against Genocide, a group that's pushing Warren Buffett to divest from PetroChina because it is "the worst of four major oil companies funding the genocide in Darfur, Sudan," points out that Buffett has been selling more shares than it might appear from the filing headlines.
Those same filings also list Berkshire's total PetroChina holdings before and after each sale.
- Holdings listed in July 12 filing before sale: 2,330,404,000 shares
- Holdings listed in Sept. 1 filing after sale: 2,143,765,000 shares
- Holdings in Sept 11 filing after sale: 1,884,654,700 shares
That's a net drop of 446 million shares, worth over $1 billion.
The explanation for the disparity: under Hong Kong Stock Exchange rules, the only sales that have to be disclosed are those that take "the percentage level of your interest in shares of the listed corporation crossing over a whole percentage number (e.g. your interest increases from 6.8 % to 7.1 % - crossing over 7%)"
Clearly, there have been other undisclosed sales that didn't bring Berkshire's stake across a whole percentage, to account for the overall reduction.
To Investors Against Genocide the "steady series of sales" is an "increasingly clear demonstration of divestment by Berkshire Hathaway." In a news release posted on its web site and e-mailed to Warren Buffett Watch, Eric Cohen, the group's chairman, says, "While Mr. Buffett is rightfully keeping quiet about his motives, it is increasingly clear that his pattern of sales indicates that he no longer wants to be associated with an investment that helps to fund genocide."
That's certainly one possible interpretation. Another is that Buffett taking advantage of a massive increase in PetroChina's share price and doesn't see as much growth in the future. Maybe it's both.
Only Mr. Buffett knows for sure. Whatever the motive, both Berkshire Hathaway and Investors Against Genocide appear to be happy with the results.
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