Why I Wouldn’t Short Berkshire Hathaway

31 Aug 2015 | Author: | No comments yet »

Berkshire Hathaway builds stake worth nearly $4.5 billion in refiner oil Phillips 66.

SEATTLE — Warren Buffett’s Berkshire Hathaway has disclosed a $4.5bn stake in Phillips 66,the oil refiner based in Houston, Texas, as the company increases its bet on the energy industry.

Billionaire investor Warren Buffett’s firm has amassed a stake value almost $four.5 billion in Phillips 66 greater than a yr after buying and selling a piece of its holding within the oil refiner for a chemical enterprise funding.For Democrats, the world’s third-richest person is a champion who has advocated higher taxes for millionaires and donated money to put Hillary Clinton in the White House.OMAHA, Neb. (AP) – Warren Buffett will turn 85 on Sunday, but he’s shown no signs of slowing down or retiring from the Berkshire Hathaway conglomerate he built over five decades.

Berkshire held almost 58-million shares after purchases last week, or more than 10% of the total outstanding, according to a regulatory filing issued on Friday by Mr Buffett’s Omaha, Nebraska-based company. A regulatory submitting says Berkshire Hathaway Inc. has collected about 58 million shares, which quantities to greater than 10 % of the Houston firm’s inventory. But green-energy advocates are expressing increasing frustration with Buffett, whose sprawling business empire is opposing them on fronts including solar power, oil train safety and the Keystone XL oil pipeline.

This year, Buffett’s friends and family may have an especially hard time shopping for the billionaire because earlier this month he just announced the biggest deal of his career. In late 2013, the Omaha, Nebraska, firm agreed to commerce about $1.four billion of its Phillips 66 inventory for one of many refiner’s companies that makes components to assist crude oil circulate via pipelines. The bet on Phillips 66 is a wager that an unexpected and significant rally by refiners during the shale boom will continue as low oil prices spur demand for gasoline, diesel and other petroleum products produced by the so-called downstream sector. The friction is evident in Nevada, where a Buffett-owned power utility, NV Energy, is fighting to hike the costs for residents to use rooftop solar panels — a push that’s similar to campaigns being promoted around the country by groups tied to conservative billionaires Charles and David Koch.

Berkshire agreed to buy Precision Castparts for $32 billion, so if regulators and shareholders approve, the aerospace and industrial company will soon join Buffett’s firm. Since oil fell by half last year, gasoline demand in the U.S. has surged to an 8-year high, as drivers see per-gallon prices fall below $3 and take to the road. “As oil prices have dropped, it’s obvious to people in the business that refiner stocks are your best bet,” Carl Larry, head of oil and natural gas for Frost & Sullivan LP, said by phone from Houston. “When people say the oil industry is failing — well, upstream might be, but downstream has never been better.” An index of four refiners on the Standard & Poor’s 500 is up 12 percent this year, compared with the larger energy index, which is down 18 percent.

The latest wager comes amid a slump in crude prices, driven by concerns that a supply glut will persist. “Berkshire’s made a clear statement about how they view the oil business,” said Cliff Gallant, an analyst at Nomura Holdings. “They seem to be taking the long view that demand for fuel is going to come back.” Concern over China’s growth roiled global financial markets last week and created a buying opportunity for Berkshire. She denounced the utility’s solar push as an “extreme anti-consumer proposal.” Greens in regions like the Pacific Northwest, as well as the top Democrat on the Senate’s energy panel, are also criticizing Buffett-owned Berkshire Hathaway Energy for trying to weaken a 1978 federal incentive program for wind, solar and other renewable power. And Buffett supports approving Keystone, the long-delayed oil pipeline that has sparked a nationwide opposition movement by climate activists and angry protests in the Oracle of Omaha’s home state of Nebraska.

He told CNBC in March that Keystone is probably “good for the country,” which would run afoul of the White House’s messaging if Obama ultimately kills the project as expected. The Republican National Committee istrying to turnBuffett into a Clinton problem, saying his activities show a stark conflict between the Democratic front-runner and one of her most visible backers. “Energy issues are another example of how Hillary Clinton is caught between her major donors and the grass roots,” RNC spokesman Michael Short said. “Environmentalists and the left are right to question whether they can trust Clinton when she and [the Clinton] foundation are busy taking money from those who don’t share their priorities.” Most Democrats hesitate to publicly criticize Buffett. Previously, American drivers facing higher prices, the 2008 financial crisis and a program that paid for replacing older cars with more fuel-efficient models were spurring forecasts that U.S. demand had peaked. But privately, some green-minded Democrats acknowledge that Buffett’s business priorities often conflict with Clinton’s and Obama’s renewable energy agendas. The mismatch points to another reality about Buffett: his reluctance to use his vast personal wealth to promote his personal political agenda, unlike liberal billionaire Tom Steyer and conservatives such as Sheldon Adelson and the Kochs. “Philosophically and politically [Buffett is] probably out there hoping to continue to promote greener energy,” said economist Charles Cicchetti, who used to work with Buffett’s companies and more recently consulted for the rooftop solar company SolarCity. “But there’s a gap between his brain and his [business] philosophy.

The Securities and Exchange Commission sometimes allows companies to withhold information from the public to limit copycat investing while a firm is building or cutting a position. He doesn’t acquire utilities so they can enhance the public good.” In the Nevada rooftop solar dispute, Buffett’s company is largely on the same page as the Koch brothers in seeking to cut incentives and impose extra fees on residents who use their solar panels to sell excess electricity back to the power grid — a move that greens warn would make installing the panels unaffordable for many people. Obama alluded to the controversy in his keynote speech at last Monday’s energy summit, excoriating utilities that stand in the way of rooftop solar power and other clean energy innovations. “So here, and across the country, this is about whether big polluters control the system, or whether consumers have freedom to choose cleaner, cheaper, more efficient energy; whether we protect old ways of doing business even when they’re not efficient, or we dream up new business models that bring new technologies into our homes and businesses, and new jobs into our communities,” the president said. Buffett has famously pledged to donate his vast fortune to philanthropic groups like the Bill and Melinda Gates Foundation, and he’s avoided bankrolling political candidates — even Clinton, whom he oncecalled“one of my favorite women in the world.” He has publicly backed Clinton and predicted she will win the presidency next year, but he gave a relatively modest $25,000 last year to the Ready for Hillary super PAC (now the ReadyPAC), the committee’s self-imposed maximum, anddonated$2,700 to Clinton’s campaign in April. Earlier this year, Buffett told CNN that he doesn’t plan to write “a huge check” for Clinton because he doesn’t believe that “elections should be decided by the super-rich.” “I like what she believes in, and I think she’s extraordinarily able and energetic, for that matter, in pushing those beliefs.

MidAmerican Energy is the largest regulated wind power owner in the country, operating 2,285 megawatts of capacity, or slightly more than the output of two big nuclear reactors. MidAmerican’s solar business also owns one of the world’s largest solar plants, the 550-megawatt Topaz Solar Farms in California, and is developing the 579-megawatt Solar Star projects in California’s Kern and Los Angeles counties.

But that’s not what moves him.” Berkshire Hathaway’s BNSF Railway haslobbied the White Houseagainstsome safety regulationsmeant to preventexplosive derailmentsby oil trains, and earlier this summer, Berkshire infuriated Washington state Sen. Now you’re coming in here and trying to undo a very important law.” Rachel Shimshak, executive director of the Oregon-based advocacy group Renewable Northwest, said the push against the 1978 law is a sign of Berkshire Hathaway Energy-owned utility PacifiCorp’s reluctance to embrace more green power. “They’re hanging on to a lot of dirty plants,” she said.

But people following the billionaire’s energy plays say they aren’t surprised about the disconnect between Buffett’s political leanings and business dealings. Buffett, they say, is running a corporation, not a political campaign. “He’s like any other powerful special interest entity in Washington, D.C., pursuing a narrow strategy to benefit his financial position without a real regard for larger, overarching policy goals or ideals,” said Tyson Slocum, the director of Public Citizen’s energy program, who has long criticized Berkshire. “It’s not evil.

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