These days “Buffett sold PetroChina stocks” are all over the news, especially in the Chinese news media. After all, Warren has the best track record among stock investors in our time. But, what should we, average investor, read from this news? Or (on the other hand) can we simple ignore this news?
First let me correct the news headline. I think we should say “Buffett reduced his stake in PetroChina H shares”, from about 11% to 5.5% of floating PetroChina H shares. Second we should not discount Buffett’s move here. Unlike Greenspan and many others, he is the guy does real investing, and beat the market (S&P 500) consistently. Of course I’m not saying we should go to another polar: follow him blindly.
I think, the real reason is Buffett felt PetroChina stock (0857.HK, or NYSE:PTR) , closed at about HKD 14.26 and has PE of 18 on Oct 09, is becoming expensive. The stock may continue the uptrend for a while, amid the Haigui of PetroChina, and flood of QDII funds approved lately. But our hero Warren, bought 0857 at around HKD 1.60 in 2003, wanted to lock in his profit. I think this is a smart move: give up some last-leg runs; avoid the potential down side of China stock market (boy, isn’t that hot?) or Oil (has been hot since 2005). We should note he has significant amount (11%) of H shares. It takes some time to sell his 0857 postions.
Last but not least, I could like to ask a question: since Petro China is also traded in NYSE as ADR (PTR), why did not Buffett take the trouble (go across the world) bought and sold Petro China stocks in Hongkong?