Buffett Back In Refiner Phillips 66 With $4.5 Billion Stake

Mega-conglomerate Berkshire Hathaway (BRK-B) reported an almost $4.5 billion stake in Houston-based refiner Phillips 66 (PSX) on Friday, as Warren Buffett’s firm boosts its holdings in the energy sector.

Regulatory filings show that Berkshire had upped its stake to 58 million shares at the end of last week, representing around 10.8% of the total outstanding shares, based on a regulatory filing released late last Friday by Buffett’s company.

Buffett and the investment management team at Berkshire Hathaway are known for taking large positions in stocks in out of favor industries. The new stake in Phillips 66 comes as crude oil prices continue their year-long slump largely related to an oversupply in the market..

Of note, Berkshire held a significant stake in the Houston-based refiner until 2014 when it swapped $1.35 billion worth of Phillips shares for a chemicals business that it merged into motor oil and lubricant giant Lubrizol.

More on new Berkshire stake in Phillips 66

In response to media inquiries, Phillips 66 spokesman Dennis Nuss noted on Saturday that the company does not comment on specific shareholders. It seems likely that Berkshire started rebuilding its stake in the refiner in second quarter. Regulatory filings indicate Berkshire purchased $3.09 billion of stocks overall in the second quarter.

Berkshire did not mention Phillips 66 in a mid-August report to the SEC, which was unusual as it reported a 7.5 million-share stake as of March 31. However, the company did note it had disclosed some information confidentially to the SEC.

“Berkshire’s made a clear statement about how they view the oil business,” commented Cliff Gallant, an analyst at Nomura. “They seem to be taking the long view that demand for fuel is going to come back.”

Of note, growing worries over growth in China and the possibility of a hard landing growth has led to downward movement in global stock markets and gave Berkshire a chance to snap up some Phillips 66 shares cheaper. Phillips 66 shares dropped under $70 early last week, but bounced back strongly later in the week.