Dec 10, 2020 (Baystreet.ca via COMTEX) -- Every time Berkshire Hathaway founder and CEO Warren Buffett buys or sells a stock, the investing world tends to sit up and take notice. That's mainly because the Oracle of Omaha has a better investing track record than your average hedge fund, managing to outperform the S&P 500 in 37 of the past 55 years, or about two-thirds of the time.
Buffett made his foray into the energy sector 18 years ago when Berkshire bought a $500 million stake in PetroChina Co. /zigman2/quotes/205108732/composite PTR +2.08% before selling it five years later for a $3.5B profit.
His energy track record after PetroChina has, however, been a mixed bag. His next big purchase, ConocoPhillips /zigman2/quotes/207605056/composite COP +2.51% in 2008, ended up losing Berkshire Hathaway Inc. /zigman2/quotes/200060694/composite BRK.B +0.42% several billions of dollars.
His biggest hit so far has been his 2009 investment in Burlington Northern Railroad for $44 billion. BNSF is a railroad behemoth that used to transport crude from the Bakken to refiners and still transports enough coal to generate 10% of the electricity consumed in the United States since the purchase. Berkshire has collected nearly $20 billion dollars in dividends from Burlington Northern Railroad, annual revenues have increased by 80%, and earnings have more than doubled.
Therefore, it pays to check and see what Warren thinks of the energy sector.
Here's a delve into Buffett's latest energy trades.
#1. Suncor Energy
According to Berkshire Hathaway's 13-F filings for Q2, the company bought around five million shares of Canadian oil kingpin Suncor Energy Inc. /zigman2/quotes/204570600/delayed CA:SU +2.50% /zigman2/quotes/210480277/composite SU +2.78% during the second quarter. Berkshire now owns 19.2 million shares of Suncor worth ~US$217 million.
At first glance, Buffett's purchase of Suncor stock appears to have been driven by his long-term ethos to buy companies that are undervalued compared to their intrinsic values. After all, Suncor never truly recovered from the 2014 oil crisis and has been on a particularly sharp downtrend over the past two years. The Covid-19 pandemic and the oil price war only served to exacerbate the stock's unfortunate trend.
But there could be something deeper than that.