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Possible Berkshire Hathaway Inc interest in Zongshen Power Machinery

January 12, 2010 | About:

According to recent reports, it is rumored that Warren Buffet and Berkshire Hathaway Inc. (BRK-A)(BRK-B) may be interested in Zongshen Power Machinery (ticker: 001696.SZ). Zongshen Power Machinery is a Chinese manufacturer of motorcycles. Zongshen is currently denying such rumors saying "The company also guarantees that in the next six months, it will not have any cooperation with Buffett on investment in new energy motorcycles.” in a recent statement.

This interest is consistent with Buffett's recent interest in companies like Burlington Northern Santa Fe Corporation (ticker: BNI) for it's energy efficient method of transporting goods. Bufett is quick to point out that rail is 3-4 more times energy efficient than shipping by truck.

This is also consistent with Buffett's interest in BYD Electronic (International) Co Ltd (ticker: HKG:1211). BYD is a manufacturer engaged in the research, development, manufacture and sale of rechargeable batteries, automobiles and related products among other things. BYD is a manufacturer of hybrid gas/electric vehicles and is expected to come out with an all electric model in the future. BYD also sells a plug-in hybrid which can charge it's batteries using an electrical outlet in ones home.

Of course, the world is growing in population and due to this, the demand for gasoline will increase driving up prices. The increase in gas prices will drive people towards more and more efficient modes of transportation. Motorcycles get superior fuel economy over cars due to their light weight making such an interest consistent with recent moves.

Zuo Zongshen, Chairman of Zongshen is expected to visit the US at the end of this month sparking rumors that his visit will include discussions with Warren Buffett. Shares of Zongshen are up about 10% since the rumors began.

If Buffett does make an investment, he will probably be limited in the size of his holding to 10% due to the same limitations that were imposed by the Chinese government from when Buffet invested in BYD.

Rating: 2.6/5 (11 votes)


Tkervin - 9 years ago    Report SPAM
Motorcycles......a dog eat dog, low margin business with a low barrier to entry. HOG has attempted to make their bikes into a "livestyle" purchase with mixed success. Buffett put some money into HOG at an attractive rate of return not as an endorsement of motorcycles generally. As countries rise up the economic ladder people buy fewer bikes not more. There is no relation at all between a railway and a motorcycle. Or a bicycle for that matter. Though Buffett has invested in Nike if you want to look at that as another transportation investment.......:-)
Hhctexas - 9 years ago    Report SPAM
You cant buy it anyway if you are an American Citizen.  Only chinese stocks listed on American exchanges, such as Nasdaq, are available for purchase.  This one is not.
Rnagarajan - 9 years ago    Report SPAM
What sources do you have for this article? Can you provide any links?
Kfh227 - 9 years ago    Report SPAM
Sorry for not linking articles. There are a handful of them out there. Doing a search for Buffett and Zongshen Power Machinery together should do the trick.

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