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Buffett's pullback in oil companies looks prescient, as crude slide continues

  • Among Warren Buffett's (BRK.A, BRK.B) Q2 moves was a pullback in oil company investments, selling off the vast majority of his stake in ConocoPhillips (NYSE:COP) and dumping some of his holdings in Phillips 66 (NYSE:PSX) and National Oilwell Varco (NYSE:NOV).
  • The move looks prescient, as U.S. crude prices have dropped from ~$107/bll in mid-June to less than $95 today, and energy stocks went from being among the best performers on Wall Street to the middle of the pack.
  • West Texas crude for September delivery fell $1.93 to $94.48/bbl, the lowest settlement for a front-month contract since Jan. 17, and Brent crude traded near 14-month lows.
  • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM
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Comments (41)
  • deercreekvols
    , contributor
    Comments (6598) | Send Message
     
    The link says that Buffet added to his shares of Suncore Energy ($SU)...this doesn't seem to follow what the "breaking news" headline says he is doing...

     

    Looking for clarification on this addition to his portfolio while he is supposedly "pulling back" on oil companies...
    19 Aug 2014, 07:20 PM Reply Like
  • User 17112982
    , contributor
    Comments (16) | Send Message
     
    He also bought into XOM in the same time frame that he reduced COP. Then added to SU...what kind of an alert is this?
    21 Aug 2014, 04:42 AM Reply Like
  • deercreekvols
    , contributor
    Comments (6598) | Send Message
     
    Was hoping an SA editor could respond to this Breaking News bit.

     

    Anyone? Beuller?
    21 Aug 2014, 06:47 PM Reply Like
  • jameso99
    , contributor
    Comments (58) | Send Message
     
    Iv'e been a very happy owner of SDRL for many years. I would hate to sell it and lose the divi too...
    19 Aug 2014, 07:27 PM Reply Like
  • mkemac
    , contributor
    Comments (1086) | Send Message
     
    Bro, he's an insider. Stupid title.
    19 Aug 2014, 07:52 PM Reply Like
  • obsidian219
    , contributor
    Comments (7) | Send Message
     
    To base an article on what the price of oil did over a two month period in reference to BRK is silly. BRK does not care what happens to anything over a two month period. Unless you are reporting on at least a 5 year period leave BRK out of it.
    19 Aug 2014, 08:04 PM Reply Like
  • PalmDesertRat
    , contributor
    Comments (3506) | Send Message
     
    I thought Uncle Warren was a long-term investor? Or does he play the market like a lot of other people.

     

    Also, it's curious that he would sell refiners and producers at the same time. In my experience the refiners often move counter to crude prices.

     

    The data for Buffett are for the second quarter which ended quite a while ago. With crude prices falling here in August, we might read in October that in August he bought producers. I am.
    19 Aug 2014, 08:05 PM Reply Like
  • anarchist
    , contributor
    Comments (1608) | Send Message
     
    This is another case of "making it up to sell news" (IMHO of course).
    As mentioned above BRK added to SU so maybe he is just moving money to a part of the energy sector he likes better? It wasn't that long ago BRK bought a bunch of SU and now more.
    I will be adding to producers also.
    19 Aug 2014, 08:18 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4077) | Send Message
     
    It isn't that simple - the Brent WTI spread is collapsing and that is probably not great for US refiners. I wouldn't sell because of the little ups and downs of oil but the US dollar is strong, that is behind all of this. How long will US dollar stay strong? That is the bigger question and if the dollar stays too strong that is terrible for exports and production in the US. Looks like this though.
    19 Aug 2014, 08:21 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5819) | Send Message
     
    "Brent WTI spread is collapsing and that is probably not great for US refiners."
    I am not selling (NYSE:CVRR). So what if it goes down. All I care about for (CVRR) is the dividend.

     

    I did buy (NYSEMKT:ESTE) and (NYSE:GLOG) for stock price growth. I think both should do well.

     

    As for the dollar, we all know that the dollar will stay strong vs. the euro and the yen. The dollar will fall vs. the Chinese yuan.
    19 Aug 2014, 08:44 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (189) | Send Message
     
    Night arrows, words and usernames can't be retrieved once sent.
    19 Aug 2014, 09:50 PM Reply Like
  • PalmDesertRat
    , contributor
    Comments (3506) | Send Message
     
    MPC took a nice pop today and is back above its level of 6/30. If that's due to a collapsing WTI spread, bring it on.

     

    What about the crack spread? That should be widening, with crude prices weak. In any event the time to buy is when prices are down, and sell when prices are up. So I've been selling bits of MPC and adding to my producers. Maybe Uncle Warren is doing the same.

     

    When crude prices recover and the crack spread narrows, it will be time to sell some producers and buy the refiners again.
    19 Aug 2014, 11:05 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (2961) | Send Message
     
    PSX back up to mid $80s too.

     

    WB must be really torn up.
    19 Aug 2014, 11:06 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (2961) | Send Message
     
    Who cares. Im not selling any of my PSX nor will i rec any of my clients sell theirs or the COP holdings one of my clients has as his largest holding.
    19 Aug 2014, 08:20 PM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    writer-
    Buffett still owns 1.6 mm shares of COP.

     

    I don't think his selling some more of his COP is a harbinger for lower crude prices nor a reaction to same.
    So stop making broad brush irrational statements.
    19 Aug 2014, 08:29 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (189) | Send Message
     
    Everything today is emotional and irrational. No curiosity. The radicals are attempting to seize power.
    19 Aug 2014, 09:08 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4077) | Send Message
     
    Did you eat the r? Oder ist es ein T├╝ffelhund? Und was ist das?
    19 Aug 2014, 09:14 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (189) | Send Message
     
    You are right, I couldn't correct the error.
    19 Aug 2014, 09:42 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4077) | Send Message
     
    Don't worry - I couldn't make an ├╝ ;P
    19 Aug 2014, 09:48 PM Reply Like
  • JMajoris
    , contributor
    Comments (1353) | Send Message
     
    Mr Buffett sold 88% of his COP. That's a big number.

     

    BRK also sold 34% of PSX and 18% of NOV.

     

    BRK increased SU by 27%

     

    ______________

     

    "writer-
    Buffett still owns 1.6 mm shares of COP."
    20 Aug 2014, 07:45 AM Reply Like
  • Tueffelhund85
    , contributor
    Comments (189) | Send Message
     
    Warren was taking profit from COP, PSX, Varco and adding to SU. Strange article. One for the round file.
    19 Aug 2014, 08:34 PM Reply Like
  • 82ndVet
    , contributor
    Comments (167) | Send Message
     
    Also, strange there is no mention of Buffett taking a significant position in Exxon Mobil (NYSE:XOM) recently. XOM is Berkshire Hathaway's 7th largest position worth over $4.8 billion dollars (over 41 million shares).
    19 Aug 2014, 10:03 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (189) | Send Message
     
    82nd,

     

    You are right about that too. XOM has lots of cash and gas; SU has lots of oil, and Warren has trains, refiners and all the above. Life is good!
    19 Aug 2014, 10:27 PM Reply Like
  • moneymorality
    , contributor
    Comments (146) | Send Message
     
    P&C, Railroads, IBM, Walmart.

     

    Save Money. Live Better
    19 Aug 2014, 10:45 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (2961) | Send Message
     
    If the article was going to make any sense, the author would have understood that if Buffett is adding to SU, he thinks oil sands will be profitable before long, which would indicate WB actually feels crude will rise in price-not fall, as crude needs to be much higher for the oil sands to make financial sense (profit).

     

    Waste of time and words...mine too : /
    19 Aug 2014, 10:57 PM Reply Like
  • chopchop0
    , contributor
    Comments (4103) | Send Message
     
    PSX? Really? It actually does better when crude slides, as it profits from the Brent-WTI spread.

     

    Once again, SA misses the mark.
    19 Aug 2014, 11:06 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (2961) | Send Message
     
    Exactly what I was thinking-thank you.
    19 Aug 2014, 11:16 PM Reply Like
  • Kal Telage
    , contributor
    Comments (289) | Send Message
     
    Without attempting to predict anything, anyone following major oil producers in the Permian, Eagle Ford or the Bakken has seen the stock prices of these growth energy companies move down sharply with the recent drop in the price of oil. What Buffet does is happening in a universe outside of my own. But, I was stopped out
    of some big producers. I am concerned about the buildup in stored unrefined petroleum and hope we are not seeing the price of oil tank due to over supply. Natural gas provides a good example of the economics of big supply. LOL.
    19 Aug 2014, 11:36 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (2961) | Send Message
     
    If crude continues to drop, it will be good for consumers-bad for producers (short term, as I don't think oil prices will stay low for that long), but our economy will benefit as consumers will spend more of that 'gas' money on 'stuff' that helps the overall economy and at least partially offset their lack of wage increase(s).

     

    Also, it will be interesting to see how the OPEC countries deal with $90 oil-IF it goes that low (which I don't think it will).

     

    Honestly...if crude prices keep falling and XOM, COP, BP's (and others') pps fall, I will start buying more/some of all (and CVX) as it will be a golden opp to get in at bargain prices imo.
    19 Aug 2014, 11:54 PM Reply Like
  • mttmartin
    , contributor
    Comments (275) | Send Message
     
    I think it was more coincidental than anything else. Buffet didn't sell all of his COP and PSX either. He has a lot of Exxon so he isn't making a bearish bet on oil. He bought more Suncor. Oil won't be down for long. Never bet against oil.
    19 Aug 2014, 11:41 PM Reply Like
  • 45Cal
    , contributor
    Comments (867) | Send Message
     
    Buffett bought into XOM, it was only a matter of time before he unloaded the rest of his COP. Fine with me, I'll continue to hold my COP & buy in the dips. W.B. can keep his XOM. Time will tell who made the better decision...good luck to you Mr. Buffett!
    19 Aug 2014, 11:50 PM Reply Like
  • 13186742
    , contributor
    Comments (9) | Send Message
     
    What IF the US starts to export?
    What if sanctions include oil and gas?
    Not a lot of talk about these questions and the price of potatoes
    20 Aug 2014, 05:11 AM Reply Like
  • virginia long view
    , contributor
    Comments (174) | Send Message
     
    He has been reducing holding in the old ConocoPhillips over several years, but just made a very large investment in xom. Perfectly consistent with avoiding de-worsification; if you are certain xom is the best longterm investment in the energy area why hold anything else unless there is something unique about it?
    20 Aug 2014, 06:57 AM Reply Like
  • sdavid0419
    , contributor
    Comments (1038) | Send Message
     
    Oil was price bound between $93 and $98 for almost 2 years and no one was dumping it. During that period the price at the pump spiked several times due to refining inefficiencies. Speculators drove the price up this past summer on fears of doom and gloom in world conditions all the while Canadian Sand and American Fracking continues to gush. My guess is the price will once again settle into a more controlled pattern with some spikes to the up side if we have another rough winter using more than expected fuel oil for heating.
    20 Aug 2014, 07:59 AM Reply Like
  • C D
    , contributor
    Comments (155) | Send Message
     
    Long on COP- Will buy more when it dips.
    20 Aug 2014, 08:00 AM Reply Like
  • RickyC
    , contributor
    Comments (69) | Send Message
     
    Didn't he trade several million shares in PSX back to them in exchange for the purchase of a business subsidiary that PSX wanted to sell?
    Perhaps that might account for the dilution of PSX stock in the Berkshire 13-F filing on August 14.
    20 Aug 2014, 05:40 PM Reply Like
  • Anasazi101
    , contributor
    Comments (1753) | Send Message
     
    We can chase the Charts and historical crude prices all over the maps;
    It's not about just the price of oil....
    It's about whether companies are hitting their numbers of revenues and earnings.
    What they have working for them, going forward...?
    Are their dividends safe and maybe growing...?
    I don't follow crack spreads too much, but do pay attention to demands.
    And what different Companies are doing with different oils/crude.

     

    I like Warren and Charlie Munger, and what they have accomplished with BERK.
    I have followed tidbits about them over the years..
    Although Value Blend investing and diversification, seems to be key for them.

     

    It might have been Buffet that said, "never fall in love with a stock"..??
    And one thing that Warren has done for years, is re-adjust, re-allocate or change investments/positions around; Except maybe his top 4-5 favorites.
    So like any good investor, we attempt that also; Change can be good.

     

    Like it has already been said BERK/Buffet reduced positions in COP, gained some in XOM, and SU...
    BUT "NEVER" LEFT the "OIL PATCH"; That's what's important to us...!!

     

    long in COP, sold SU a year or so ago(and a couple others); May go back?
    long in refiners and pipelines and rail.
    21 Aug 2014, 08:10 AM Reply Like
  • oldokie
    , contributor
    Comments (399) | Send Message
     
    Only one comment on Buffett--if he is so flawless, how come he took a bath in 2008 on COP?

     

    I honestly think he is scared of the stock.

     

    One question: what happens to his RR when it competes with pipelines? I would not be surprised if there was not some annoucement at the last minute before the elections in Nov on Keystone.

     

    Do your own study. Read, then make your best move. There are forces in the world that none of us control but fundamentals reverse risks. One "for instance" and I will log off--winter/cold weather.
    21 Aug 2014, 09:59 AM Reply Like
  • Anasazi101
    , contributor
    Comments (1753) | Send Message
     
    Buffet has taken a bath on many different things/investments....
    He does point that out occasionally ....
    I'm always leery on some of his moves or motives...And people should ask why and do their own further research...
    To blindly follow any big name or investor, can have it's consequences..
    Even Buffet or BERK, amongst a dozen others.

     

    Doubt K-Line XL will have to major effect on Buffet, he owns other companies in the oil patch and picked up more Suncor...And owns many that have positions in or will benefit from the tar sands and will process it eventually...

     

    The Rail business hauls a lot of other stuff besides oil, and I think his company saw that coming, with a better recovery...
    Coal has gotten busy in some places...
    And Crude or products are hauled many places, that pipelines do not go; And trucks can't haul the loads or the overflows...Too busy.

     

    The K-LineX won't be built over night, and Buffet will benefit either way..
    I think he realized that, and then on top of everything else, got a "sweet deal" on picking up and owning a Railroad, plus getting listed on the exchanges for "B".
    Until the Nebraska's Supreme Court makes a decision, probably nothing moves forward...And Obama's Administration is only "one of the cogs in the wheel".
    I don't fault him or them for any of this...Progress marches forward when the time is right...
    In the meantime Buffet, BERK and BNSF, keep "chugging along".
    21 Aug 2014, 01:28 PM Reply Like
  • oldokie
    , contributor
    Comments (399) | Send Message
     
    He has been very successful very often.
    21 Aug 2014, 02:00 PM Reply Like
  • Anasazi101
    , contributor
    Comments (1753) | Send Message
     
    Your right Okie, Warren has done well over the years...
    He had a leg-up start, and has built his fortunes over 60+ years and BERK about 50 years; I believe ?
    The last 25-30 years, he has been able to make some real sweet deals..;
    That 99% of Americans will never know.
    I guess I have to give him and Munger credit....They earned it..
    But a little differently than most..
    21 Aug 2014, 05:12 PM Reply Like
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