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Tuesday, July 28, 2020

Buffett banks on a Trump win



When E.F. Hutton talked, people listened. But death silenced him in 1962, and his firm folded in 2012. So now Wall Street listens to Warren Buffett, and I believe he just shouted re-election.

The Motley Fool reported, "Between July 5 and July 22, Warren Buffett and his team deployed over $10 billion of the company's capital.

"During the first week of July, Berkshire Hathaway announced that it would be acquiring an assortment of natural gas transmission pipelines and storage assets from Dominion Energy (NYSE:D) for $9.7 billion. This effectively includes paying $4 billion for the assets and assuming $5.7 billion in debt from Dominion tied to these assets.

"For Dominion, the disposition of these transmission and storage assets will allow it to focus almost exclusively on its utility operations. The roughly $3 billion in cash received from Berkshire Hathaway, after taxes, will be used repurchase shares of the company's common stock, which may have a positive impact on earnings per share and perceived attractiveness by investors.

"As for Berkshire Hathaway, it more than doubled its share of interstate natural gas transmission in the U.S. from 8% to 18% and landed itself a cash cow in the process. It also doesn't hurt that Berkshire nabbed a 25% stake in liquid natural gas export, import and storage facility in Cove Point, Maryland. This is one of only six LNG import/export points in the U.S."

He is still sitting on, as Taggart said in Blazing Saddles, "a shitload a dimes" and waiting for an opportunity to get as rich as Jeff Bezos.

But Buffett's move into fossil fuels is telling. The man loved Obama's presidency, which thanks to squashing the Keystone XL pipeline protected his railroad monopoly on hauling oil out of North Dakota which produces a million barrels of oil a day. (1.22 million in April even as demand crumbled.)

Biden is a whole  'nother deal.

Fox reported, "A 2020 presidential election win by former Vice President Joe Biden represents the 'biggest risk' to Warren Buffett’s latest deal, according to one industry expert.

"Buffett’s Berkshire Hathway on Sunday announced plans to purchase Dominion Energy’s natural gas transmission and storage network for $9.7 billion, including debt. A Biden presidency would likely lead to stricter regulations on the energy industry."

Crazy Joe is pushing the Green Deal.

The last thing you want to own under President Biden would be a fossil fuel company.

There is a possibility that Buffett plans to ship the natural gas overseas to Europe, but that would require a cogent foreign policy from a Democrat. Biden's party stopped standing up to Russia when Oswald assassinated Kennedy.

All of which makes Buffett's move into fossil fuels telling politically.

Fox reported, "Berkshire’s deal for Dominion’s natural gas assets is 'classic Buffett in the sense that it's a best-in-class operator whose valuation is discounted because of macro or exogenous forces,' Cathy Seifert, director at New York-based CFRA Research, told Fox Business.

"The deal, which includes more than 7,700 miles of natural gas transmission lines and 20.8 billion cubic feet per day of transportation capacity, will help Berkshire increase its scale and presence in the energy space."

Buffett does not like Donald John Trump, but he just bet $10 billion on President Trump's re-election.

Actions speak louder than polls.

11 comments:

  1. Buffett isn't too worried about a Biden win. He knows Jill or Joe's VP pick can be bought.

    TarsTarkas

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    1. no doubt....he can funnel the $ through joe's existing chinese accounts

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  2. Two upcoming dates when Warren is in considerable difficulty: 09/23/20; 10/15/20.

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  3. I don't always comment but when I do I discuss money that never sleeps


    If you ever talk with a Billionaire I think you will find a very neutral apolitical type of person. That does not mean they don't care about social issues of the day. Or that they are right or left. Most are just in the "don't care about labels" camp.

    If anything I would classify most as moderate European "Liberal Democracy" types. Love Switzerland, France and Ireland type political views while looking down their nose at Tory in UK (while secretly contributing to Boris' political efforts).

    Investing in Natural Gas is not necessarily political or an indication of one party in power. The US needs base load generation plants to keep hospitals going on cloudy non-windy days when Green energy suddenly is not there. The way most of the world did base generation used to be with Coal. Coal fired plants created acid rain (we were told) and created pollutants which again we were told were bad enough to worry.

    Suddenly when coal became not the fuel to use. Certain smart people realized that on cloudy non-windy days you might have hospitals go dark. Thus Nat Gas has been catapulted as the "coal alternative". It is a cleaner fuel. But it's energy density IS terrible compared to coal. And the only way to transport it economically is via pipeline really. (Germany GREEN GREEN Germany realized they needed nat gas... which is why they are cozying up to Russia now)

    It's entirely reasonable that a Dem or Repub admin will support Nat Gas and Nat Gas pipelines. So really Buffet is not making a political statement at all. IF he were making a statement about political futures he WOULD buy or invest in a dirty energy company with heavy oil assets and exploration into dirty oil.

    If Buffet did invest in Oil say Sept or Oct that would be an indication of who he thinks will be on the Throne come Feb.

    I just had a sudden thought. IF he were to invest in more Nat Gas energy, then Warren thinks we are going to have international war like turmoil.

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    1. Buffett is a hard leftist, not just a "liberal."

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  4. You don't know Buffet. He is NOT apolitical. He is hard left on several issues the most noteworthy is on abortion as he is a big Planned Parenthood supporter. I suspect he has somewhat the mind of a eugenicist.

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  5. I’d like to see him investing in nuclear power.

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  6. The market will forecast the winner. I didn't expect the signal to be this early. Buffet is using a value energy play but if he expects a biden win he would keep his cash. All stocks will be on a fire sale with energy stocks particularly hard hit. None of biden's policies or the democrat platform are favorable to either energy or corporations.
    I figuted August would tell us what to expect. Check August 2008 to see that the market expected an obama win. This is good news for 401K plans. Don't sit on cash. From now to the end of the year will be a rocket ride.

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  7. Natural gas is very cheap as an energy source.

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  8. "Biden's party stopped standing up to Russia when Oswald assassinated Kennedy."

    I trust you use the event as a marker in time, and not as a cause.

    Even so, I'm not sure it's strictly true. LBJ ramped up the VietNam counter-commie, anti-USSR era in the five years after JFK's killing. Admittedly the VP Hubert was not a fervent cold warrior. Not sure what sort of attitude Tip O'Neill brought to the struggle.

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