Quick Take: Buffett Sells China

Recs

12

The love affair between Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) and PetroChina (NYSE: PTR) appears to have run its course.

Berkshire has reported selling more than 70% of its stake in the Chinese energy behemoth, and according to The Wall Street Journal, it has likely liquidated its entire position. Some attribute the sales to the Darfur controversy. But I believe that in and of itself, that issue wasn't enough to force Warren's hand. Divestment was put to a vote at the annual meeting and resoundingly defeated.

Others attribute the sales to frothiness in the Chinese market. PetroChina shares have returned nearly 1,000% over the past five years and 50% year to date. If you look at the long-term chart, shares have recently gone parabolic. Remarkably, PetroChina is actually the year-to-date laggard compared to Shanghai Petrochemical (NYSE: SNP), Sinopec (NYSE: SHI), and offshore explorer CNOOC (NYSE: CEO).

Ultimately, the situation appears to be a fortuitous dovetailing. Berkshire does right by activists and its shareholders by cashing in today. Unless you use bubble-vision valuation metrics like five-year forward earnings -- ahem, Mark Mobius -- PetroChina looks pretty fully valued. It's a wonderful time to take a multibagger off the table.

Closed for 15 months – opening 10 days only! Get notified ahead of time as our expert portfolio manager invests $1 MILLION in the best opportunities from across The Motley Fool’s premium investment services. This is the first open since August 2008, by invitation only. Enter email below.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

TD AMERITRADE
more info
ShareBuilder
more info
Power E*Trade

more info
Scottrade
more info
Fool Disclosure

DocumentId: 538445, ~/Articles/ArticleHandler.aspx, 11/8/2009 9:48:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

The Must-Read Story on Fool.com
Which Companies Can Buy It Like Buffett?

Related Tickers

11/6/2009 4:01 PM
CEO $158.32 Up +1.65 +1.05%
CNOOC Limited (ADR… CAPS Rating: ****
PTR $127.75 Down +0.00 +0.00%
PetroChina Company… CAPS Rating: ****
SHI $43.06 Down -0.63 -1.44%
Sinopec Shanghai P… CAPS Rating: ****
SNP $88.34 Down -0.08 -0.09%
China Petroleum &… CAPS Rating: *****

Community: Investing Wiki

Term Of The Hour

Grey market: Grey market (also gray market or parallel market) refers to the selling and buying of goods through unauthorized or unofficial channels.

Want to learn more or edit this definition?
Click here to read more!