2 February, AtoZForex.com, Lagos – Over recent, the rating agency Standard & Poor’s downgrades Shell and all eyes are on the next move of billionaire and investor, Warren Buffet. Especially, after the recent launch of another round of stocks acquisition of the American multinational energy company, Phillips 66. The oracle of Omaha resumed his Phillips 66 purchase after a two-week break. Yet, is the Royal Dutch Shell next?
Standard & Poor’s downgrades Shell
Amid the oil rout, energy giant Royal Dutch Shell (RDS.A, RDS.B) has been downgraded by Standard and Poor’s rating agency. S&P lowered its credit ratings on the energy giant while placing other oil majors, such as Shell, Eni, Repsol, Statoil and total on ratings watch with likely negative implications.
The latest debt rating for Royal Dutch Shell plc is the lowest since Standard and Poor’s began coverage in 1990. This suggests the possibility of a follow up of downgrades of several other major European oil and gas companies in the coming weeks.
The news comes after Standard and Poor’s lowered its assumption for Brent crude down to $40/bbl for the year 2016 only three weeks ago.
Berkshire’s shopping spree
As Standard & Poor’s downgrades Shell, the entire scenario is more like an opportunity for Berkshire Hathaway, Buffet’s holding company. The firm began its shopping spree around the time the oil price decline worsened, and Warren Buffet has since kept his eyes on the oil refiner, Phillips 66. Since around early January last year, Berkshire has scooped 10.8 million shares for $832 million around the price of $77. Berkshire revealed in a new filing that over a three day period last week, it purchased another 2.5 million shares of the oil giant for around $200 million. The purchases came at $77, $78 and $79 per share.
Phillips 66, a big oil refinery listed on the New York Stock Exchange, witnessed a decline in its stock price as a result of the oil glut and the plunge in oil prices, making its stocks cheap and an easy target for the value investor.
Majority stake in Phillip 66
Berkshire Hathaway’s stake in Phillip 66 is now worth $5.7 billion, which is about 13.5 percent of the outstanding shares. Making Buffet the largest shareholder by a wide margin. The usual several-days lag between purchases and sec filings leaves us with an open mind as to how many shares Buffet did indeed acquire, due to this lag, it will take some time to know if any other purchase were made.
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