Warren Buffett buys Phillips 66 stake with $4.5bn investment

Warren Buffett’s Berkshire Hathaway buys near $1 billion worth of oil company

Since the prices globally have gone down on oil, Warren Buffett is up for another bet on something that can restore his net worth from dropping this past 2015 and bring back more shareholding value to the company’s shareholders.

In a new filing, Buffett’s Berkshire Hathaway reveals that on Monday, Tuesday and on Wednesday of this week the company had purchased another 1.7 million shares of the energy giant for almost $132 million. Over 15 days of buying since Jan. 4, Berkshire has spent $964 million to add 12.5 million shares to its Phillips 66 stake. Another report this past August of 2015 states that Buffett’s conglomerate company disclosed a $4.48 billion overall ownership of the energy giant. In total to date that totals to $5.44 billion which represents 12.9% of the whole company. The company’s market capital is worth $42.2 billion and it was reported that the company in 2014 had revenues of $161.2 billion. It netted just over $4 billion that year and the company’s earnings have skyrocketted ever since the investing conglomerate poured millions of dollars worth of equity in exchange for shareholding ownership.

A logo of the energy titan Phillips 66
A logo of the energy titan Phillips 66 that got a 12.9% purchase from gigantic beast Berkshire Hathaway.

Buffett’s bet on oil is major since he believes that whatever prices drop must go back up on the market for any corporation. Even in economical struggles do major companies ever get pulled out of financial relief because of the products and services they have offered to consumers for decades.

Warren Buffett, chairman and CEO of Berkshire Hathaway, takes his seat to speak at
Warren Buffett, chairman and CEO of Berkshire Hathaway, takes his seat to speak at the Fortune’s Most Powerful Women’s Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque

The current situation for demand for oil, is that every major economy in the world is suffering from aging populations of the elderly, which slows consumer spending down. Countries like China, which had been the big growth driver for years in this world’s financial economy, is showing bitter weakness, and the most recent negative news is manufacturing company PMI coming in at $49.4 per share and then in December at $49.7 per share. That makes six months of the stock price just getting smaller 50 other major companies share’s show the same results per the stock price. This is happening because demand isn’t there anymore and motivation isn’t either which helps drive the stock price high in terms of volume. That overall lack of consumer demand is also why oil continues to move lower. This is the perfect opportunity for mega investor Warren Buffett to come up and start buying diluted shares based on their lowering prices for a larger shareholding position in its company.

 

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