Berkshire Increases Stake In Energy Stocks Despite Higher Prices
Big-name investors perform hours of extensive research before making an investment. With millions of dollars on the line, it would be wrong not to…
Even though much of that research is private, the stocks they buy and sell aren’t because large investors are required to disclose that information with the Securities and Exchange Commission (SEC) in a timely manner.
These filings are called SEC Form 13F.
They’re to be filed within 45 days after the end of a quarter by all institutional investment managers with at least $100 million assets under management. This allows the public to keep tabs on what institutions are doing by providing a blueprint of all the stocks they’re buying, selling and holding.
The primary goal of these reports is to keep things nice and transparent.
I find the 13F to be extremely valuable because it lets us see what type of positions companies like Berkshire Hathaway Inc. (BRK.A), run by one of the world’s greatest investors, Warren Buffett, has.
In the most recent filings for Berkshire, we learned that the holding company began buying shares in Occidental Petroleum Corp. (OXY) during the first quarter and has only increased its stake since then.
It held 136.4 million shares at the end of March and now holds roughly 143.2 million shares, or a 15% stake, of the Texas-based oil and gas company.
Berkshire also increased its holdings in Chevron Corp. (CVX), another energy company, during Q1 from $4.5 billion at the end of 2021 to $25.9 billion at the end of March. This made it one of the company’s four largest holdings.
If you’re someone who pays close attention to detail, then you probably noticed that I said the holding company and Berkshire began buying instead of Buffett himself. I did that because Buffett has two investment officers at the firm, Todd Combs and Ted Weschler, which means we really don’t know if he personally approved the purchases in OXY and CVX or not…
What we do know, however, is that he did select these managers…
Even if Buffett didn’t make the decision, it is always worth taking a look at the highly profitable stocks and sectors Berkshire investments are concentrated in.
This brings us to Valero Energy Corp. (VLO), the high-quality stock I recommend selling a put on this week.
Valero Energy is an international manufacturer and marketer of transportation fuels, petrochemical products and power. It is the world’s largest independent petroleum refiner and the second largest renewable fuels producer.
The petroleum refiner is also a Fortune 500 company, an annual ranking of the United States’ 500 largest companies by total revenue. The list is assembled and published by Fortune magazine and is a big deal because the firms on it are said to be of very high status and prestige.
Toward the end of last month, Valero reported first-quarter earnings that blew past Wall Street’s expectations.
Revenue came in at $38.54 billion compared to the consensus estimate of $27.69 billion, while its quarterly refining margin more than doubled to $3.21 billion from the previous year.
Shares of VLO recently reached a new 52-week high of $131.69 during midday trading on Tuesday, May 17, shortly after JPMorgan Chase & Co. (JPM), one of the oldest financial institutions in the U.S., decided to raise its price target on the stock from the $111 level to $142…
This tells us there could still be an upside of some 14% to be had…
I also think it is important for us to note that the stock has risen about 60% in the past 12 months, while the S&P 500 is down 7%.
That being said, it shouldn’t be any surprise when I tell you that VLO is on an Income Trader Volatility (ITV) “buy” signal, which means right now is an ideal time to benefit from selling put options.
To give ourselves added protection in this volatile market environment, I’m recommending a short-term trade of roughly three weeks and a strike price that gives us an additional 23% cushion from current prices.
The point is, trading options could be a way to increase your income by hundreds or even thousands of dollars every month. But you need to know the ropes before making trades. That’s where my premium Income Trader service comes in…
Each week since February 2013, I have provided my subscribers with low-risk put selling opportunities. And so far, more than 90% of my trades have been winners.
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