As crude prices continue to fall, Warren Buffett shifted his holdings away from the oil industry, opting instead for communications and industrial goods. Buffett’s investment firm, Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B), released the changes in their 13-F filing with the Securities and Exchange Commission (SEC).
On occasion, the SEC allows Berkshire to delay reporting some of its activity, a concession to Buffett’s outsized influence on the investment community. The “Oracle of Omaha” has a legendary history and his buying activity is carefully scrutinized. However, his recent movements on the short side also reflect a clear opinion on the direction of capital markets.
Berkshire divested some of its shares in National Oilwell Varco, Inc. (NYSE:NOV) and Phillips 66 (NYSE:PSX), while adding to its holdings of Charter Communications, Inc. (NASDAQ:CHTR). (Source: Berkshire Hathaway 13-F SEC Filing, June 30, 2015.)
Buffett Sells Oil Companies as Prices Stagnate
Crude oil prices have fallen over 54% in the last 52 weeks, sending shockwaves across financial markets. Both National Oilwell and Phillips 66 are engaged in supporting roles to the production and distribution of oil, and were thus deeply affected by the slump.
Phillips 66 is a midstream company that stores and transports energy, while National Oilwell manufactures equipment for the upstream oil market. The former has only seen a four percent decline in the last 12 months, but the latter has plunged over 52% during the same timeframe.
The sell-off comes after Buffett made his largest-ever purchase, buying $37.2 billion worth of shares in Precision Castparts Corp. (NYSE:PCP) and leaving Berkshire with only $40.0 billion in liquid assets. By going short on the oil industry, Buffett is padding his cash holdings and simultaneously signalling his pessimism on oil over the medium term. (Source: Yahoo! Finance, August 14, 2015.)
Berkshire Hathaway Buys Charter Communications
Buffett upped his holdings of Charter Communications to 8.51 billion shares, increasing his bet on the cable provider to $1.46 billion. Charter has two pending deals that could transform the company; including a $55.0 billion bid for Time Warner Inc. (NYSE:TWX), and $10.4 billion for Bright House Networks LLC. (Source: Bloomberg, August 14, 2015.)
The distribution of Berkshire’s portfolio was balanced by a 30% reduction in the firm’s exposure to Viacom, Inc. (NASDAQ:VIA). It should also be noted that Buffett may be gearing up for another big buy since the company kept some trades secret.