Giro Lino's avatar
$2.6m follower assets
Why is Buffett buying oil companies?
If Buffett is adding $OXY and $CVX, he's looking beyond a two-year bull market on oil markets. IMHO, this is a strong endorsement that E&P companies will not run crazy Capex plans.

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Eric's avatar
$9.9m follower assets
Breakdown on recent Buffett Buys
$A makes up nearly half at 43.3% of deployed capital
$CVX and $OXY combine for another 32.2%
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Thx for this. Very interesting buys for Buffet lately. Expanding more and more to tech over the years it seems.
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Berkshire Buys $4.2B Stake in Hewlett Packard
Shares of Hewlett Packard $HPQ, the multinational computer and printer manufacturer company, are up as high as 15% in pre-market trading hours after Warren Buffett's Berkshire Hathaway $BRK.B $BRK.A disclosed they acquired a stake in the business valued at a whopping $4.2B (~121M shares).

This purchase marks Berkshire's third multibillion-dollar investment over the last month or so, after picking up $7.5B worth of Occidental Petroleum $OXY and their $11.6B takeover of Alleghany Insurance $Y.

A quote from the Financial Times reads as follows:

"The addition of HP stock to Berkshire’s portfolio signals that Buffett is still betting on corporate America and the US economy, even as Russia’s invasion of Ukraine raises the possibility of slower global growth and high inflation.

It marked a noticeable shift by a company that had largely sat out a spate of big dealmaking over the past six years as stock valuations soared. Buffett had complained about the lack of appealing investments as recently as February, writing to shareholders in his annual letter that he and his right-hand man Charlie Munger were finding “little that excites us”."

The disclosure on Wednesday with the SEC did not indicate whether Buffett made the investment in HP himself or if it was executed by one of the two portfolio managers on his team. The two managers, Todd Combs and Ted Weschler, oversaw just under a tenth of the company’s $351bn stock portfolio at the end of 2021, but Buffett has traditionally been the one to pull the trigger on larger transactions.
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This looks like another IBM. Buying value just for the sake of it.
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If oil goes to $200, here's what I'm bullish & bearish on
Bearish:
$UBER $LYFT $DASH $GRUB and other gig economy transportation platforms
$AAL $UAL $DAL $LUV and other airlines
$KNX $JBHT $USX $SNDR and other trucking companies

Bullish:
$TSLA $F $GM $RIVN $LCID $FSR and other electric vehicle manufacturers
$SEDG $RUN $ENPH $TAN and other solar stocks
$XOM $CVX $OXY $PXD $COP and other oil stocks

Oil companies today have pricing power like never before. Automakers have pricing power like never before. Solar companies, they'll soon start jacking up their prices as demand for solar energy systems surges during the summer.

Meanwhile, fewer people are gonna use their vehicles to offer ridesharing services and food delivery services because already, fuel costs are eating up a majority of their earnings. Also, airlines will have to balance between finding ways to attract passengers to fly with them (through lower prices) and not deterring them through higher prices (since they want to pass down the higher fuel costs to customers).

Trucking companies have it the worst. The industry has been commoditized as all truckers are essentially independent contractors with their own trucks and they do their own deliveries. The smaller companies are more vulnerable to high oil prices. Meanwhile, the larger trucking companies will have to bump pay for truckers to justify them making deliveries amid the high fuel costs.

These times are unprecedented. We need to drill more oil. Bring back the fracking revolution. The OPEC cartel members have an incentive to produce a lot more oil than their current production target.

Reactivating nuclear power plants takes months or even a few years. Quadrupling down on renewables requires heavy investment and a lot more raw materials, which we are currently struggling to import. Plus, transitioning to a green energy economy takes a very long time. The green energy solutions we currently have aren't dependable. The wind doesn't blow all the time. The sun doesn't shine all the time and it doesn't shine every day and every month. Geothermal plants and hydroelectric plants can only be built in certain places. Biomass may seem viable but we don't want to cause food prices to rise because we're now removing food supply for the sake of energy production.
I don't argue that higher oil prices are good for ALL EV makers, but I can't rationalize the valuations of $RIVN $LCID $FSR and others. While I do believe $TSLA is wildly undervalued (watch their EPS growth this year), too much unearned credit has been given to others trying to follow in tesla's footsteps. These new players have a long way to go before justifying their current valuations, let alone any future growth.
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Upcoming Earnings Calendar (Feb 21th - 25th)
Hey guys! Here's the upcoming earnings calendar! Several very interesting reports coming up. Here's what I'll be looking forward to.

  • $MELI - How much did inflation impact their logistics margins?
  • $SQ - Cash App Users and Revenue Growth
  • $COIN - I think they will deliver a monster quarter. Crypto volatility should incentivize trading, driving commissions revenue above forecast.

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

TUE:


WED:


THU:


FRI:
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Closed out the $OXY swing Friday morning. Definitely going to continue looking for more strong tickers WITHIN strong industries for potential breakouts.
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