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Warren Buffett has been making energy stock news over the past few months with his latest acquisitions.
Buffett has chosen to strategically place his investments in energy stocks in 2014.
You see, the global consumption of oil and gas is predicted to increase 56% by 2040. The S&P Oil & Gas Exploration and Production Select Index, which represents the oil and gas exploration and production sub-industry portion of the S&P Total Markets Index, has risen roughly 150% since 2009.
Canada and the U.S. are Buffett's investment destinations of choice, and according to the latest energy stock news, the savvy investor sees deep value there.
Here are Buffett's recent plays …
Warren Buffett Made Energy Stock News With These Plays
It was only last year that Buffett's Berkshire Hathaway Inc. (NYSE: BRK), through its MidAmerican Energy Holding Co. (MWPSL), invested more than $5 billion in Nevada utility NV Energy Inc. MidAmerican picked up the company at $23.75 a share, a premium of about 23% to the utility's closing price at the time of the acquisition. The deal included around $4.7 billion in assumed debt, for a total enterprise value of about $10 billion.
"[NV Energy has] a great management team, an excellent set of regulated assets and we love Nevada," MidAmerican Chief Executive Greg Abel said in an interview. "Warren is extremely supportive of the acquisition of NV Energy and is extremely excited about the long-term opportunity to invest in Nevada."
Also last year, Berkshire Hathaway paid half a billion dollars for 18 million shares in Canadian oil company Suncor Energy Inc. (NYSE: SU). The company is one of the largest energy companies in the world, located north of Fort McMurray, Alberta.
Although people questioned the investment, Suncor accounts for nearly 7% of Canadian gross domestic product (GDP). It also employs nearly 300,000 people. Additionally, it's less expensive to produce oil in Canada compared to the US, widening margins. As oil demand grows, the future for Suncor looks bright as a long-term investment.
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In 2014, Buffett is eyeing more energy stocks, according to his annual letter to shareholders in early March. According to energy stock news sources, Buffett chose his investments with strict criteria – one of them is a requirement of at least a 10% return on investment. Another is that the company must run on little or no debt, and make at least $75 million in pre-tax income in a consistent manner.
Alliant it is soon to venture into renewable energy sources, according to Morningstar. This is a move that Buffett likely sees as a plus for future growth for the energy stock.
With regard to Wisconsin Energy, Buffett said he's confident about the management team there.
Energy stock news revealed that Buffett recently changed his portfolio with regards to his stakes in rival companies Exxon Mobile Corp. (NYSE: XOM) and ConocoPhillips (NYSE: COP). Buffett still has a decent stake in COP, but he moved additional cash into Exxon Mobil. The stake in Conoco was around 11 million shares last quarter, down by over half of the 24.1 million shares in mid-2013. Still, the shares are valued close to $770 million.
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