Berkshire Hathaway (NYSE: BRK.A) Opens Up About Its $4.5 Billion Stake in Philips 66 (NYSE: PSX)

31 Aug, 2015

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In a recent development, there was an astonishing disclosure by Berkshire Hathaway (NYSE: BRK.A) owned by Warren Buffett that it has a $4.5 billion stake in Philips 66 (NYSE: PSX), which is an oil refiner based in Houston. Thus the company owned by Warren Buffet, the well-known billionaire investor managed to increase its share in the energy industry.

After the purchases made this week, Berkshire now owns about 58 million shares in Philips 66. This tantamount to over 10% of the total outstanding according to the regulatory filing by Buffett’s Omaha, a company based in Nebraska. On Friday, Phillips 66 closed at a figure of $77.23 in New York.

Buffett along with Ted Weschler and Todd Combs who are his deputy investment managers are known in the industry for making contrary and large bets on various stocks. This latest deal comes amid a reduction in the prices of crude oil and there are growing concerns about the persistence of a supply glut.

Berkshire Hathaway is thinking ahead when it comes to crude oil

There was a clear statement that was made by Berkshire about how the entire oil business is viewed by them. Berkshire Hathaway is taking a long view that very soon the demand for crude fuel is going to be quite high.

Earlier this week, there was a growing concern about how the growth of China is clouding the global financial markets and generated a purchasing opportunity for Berkshire Hathaway. On Monday, the share prices of Philips 66 went below $70 amid a sell-off, but rebounded sharply in the later part of the week.

But given the high volume of the holding scale, possibilities of Berkshire accumulating the stake for quite some time cannot be ruled out entirely, as stated by Gallant. The filing also reveals that Berkshire had to pay only a fraction of its stake as the price.

Till earlier this month, there was no disclosure made by Berkshire about its investment in Philips 66 towards the end of the second quarter. This was the time when Buffett’s firm also stated that some data were omitted by it which was however reported with great confidentiality to the regulators. Often, the Securities and Exchange Commission makes an allowance for companies to withhold certain sensitive pieces of information from the public so that copycat investing can be limited especially when a firm is cutting or building a position. More stocks were formerly held in the refiner by Buffett’s company and most of those shares were used to purchase a business last year from Philips 66.

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