Berkshire boosts oil bet with Kinder Morgan stake, SEC filings reveal

Warren Buffett
Adam Jeffery | CNBC

Warren Buffett's Berkshire Hathaway on Tuesday disclosed a new investment in pipeline operator Kinder Morgan, boosting its bet on the oil industry as crude prices hover near 12-year lows.

Berkshire owned about 26.53 million Kinder Morgan shares worth roughly $395.9 million at year end, according to a U.S. Securities and Exchange Commission filing detailing its U.S.-listed stock investments.

Shares of Kinder Morgan rallied in premarket trading Wednesday, rising $1.24, or about 8 percent, to $16.86. They had closed up 66 cents at $15.62 in regular trading.

Berkshire has also been boosting its stake in oil refiner Phillips 66. As of Friday, it had spent $1.08 billion this year on Phillips 66 stock, giving it a 14.3 percent stake.

Kinder Morgan shares have fallen by nearly two-thirds since April as falling oil prices cut into profitability.

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That plunge has prompted the Houston-based company to lower capital spending, and in December cut its dividend for the first time.

It is unclear whether Buffett or one of his deputies, Todd Combs and Ted Weschler, invested in Kinder Morgan, though smaller investments of this nature are often not Buffett's.

Nonetheless, investors often view such disclosures as a signal of where Buffett and his portfolio managers see value.

"KMI has many of the qualities Buffett looks for in his investments, including stable, fee-based assets which generate significant amounts of cash flow," Morningstar analyst Peggy Connerty said in an email, referring to Kinder Morgan's ticker.

Given the stock price decline, effort to improve its balance sheet, and the lack of a need for new equity this year, "for a long-term oriented investor KMI is a decent name to own," she said.

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Kinder Morgan spokeswoman Melissa Ruiz said: "We are pleased that others see the value in the company that we see."

According to Tuesday's filing, Wells Fargo & Co remained Berkshire's biggest U.S. stock holding at $26.08 billion, followed by Kraft Heinz at $23.69 billion.

A stake in International Business Machines (IBM) declined by nearly $600 million in the quarter to $11.15 billion.

Berkshire also reported boosting its share stake in Deere & Co and cutting its share stake in AT&T Inc.

Berkshire also owns roughly 90 businesses including the BNSF railroad, Dairy Queen ice cream, Fruit of the Loom underwear and Geico insurance. It paid about $32 billion last month for industrial parts maker Precision Castparts.

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