Please ensure Javascript is enabled for purposes of website accessibility

Warren Buffett Snaps Up Kinder Morgan Inc.

By Motley Fool Staff - Feb 24, 2016 at 10:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the most anticipated quarterly events is when Berkshire Hathaway discloses is holdings, and in its most recent disclosure, we saw that Kinder Morgan was added to the portfolio.

Last week, we learned that Berkshire Hathaway (BRK.A 1.69%) (BRK.B 1.64%) recently bought $400 million worth of Kinder Morgan (KMI 1.31%)

In this video segment, Motley Fool analysts Sean O'Reilly, Tyler Crowe, and Taylor Muckerman go over the numbers and what they mean about the buyout, and also how the deal bodes for Kinder Morgan's future.

A transcript follows the video.

This podcast was recorded on Feb. 18, 2016. 

Sean O'Reilly: And the big story of the week. Kind of. Sort of. I don't know. Warren Buffett steps up and buys Kinder Morgan. He bought, what, 26.5 million shares or something?

Tyler Crowe: Yeah, somewhere just shy of a $400 million stake.

O'Reilly: So, not big for him, but...

Crowe: No, no.

O'Reilly: It's nice to see.

Crowe: Yeah. Anytime a company gets the stamp of approval from Warren Buffett, it's normally a pretty good sign. When you're looking at a $300-400 million acquisition, it probably means that it might not have been Buffett himself, it may have been one of his...

O'Reilly: This has a Todd Combs feel to it, because it's only $400 million.

Crowe: Exactly. So, it may not actually be Buffett himself, but certainly within the...

O'Reilly: What's the name of that other lieutenants he has? Todd Combs and... ugh, anyways.

Crowe: Not ringing a bell right now. But, if you look at Kinder Morgan, you go from a company that, a few months ago, everyone was questioning, "Is this dividend sustainable?"

O'Reilly: Then it got cut, yeah.

Crowe: "They're going to run into some credit ratings," then they immediately cut, and now, I've got to assume that it wasn't just back in December when it happened, Berkshire Hathaway and the people there said, "Oh! Time to really start looking at these guys!" Then they pull the trigger on it within months. Actually, if you think about it, the purchase that they made on the 13F would have come in the fourth quarter. So, this was actually probably happening then. But I've got to imagine that the months and quarters and maybe even a year or so before that, this was something that was on the radar. I can't imagine that they made such a quick decision on that without really looking at the business long term.

O'Reilly: Got it. And actually...

Muckerman: Ted Weschler.

O'Reilly: There you go!

Taylor Muckerman: Todd Combs and Ted Weschler.

O'Reilly: There. And, actually, I think Ted, he lives here in Virginia in Charlottesville.

Muckerman: Yeah, I think you're right.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$415,850.00 (1.69%) $6,900.00
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$277.50 (1.64%) $4.48
Kinder Morgan, Inc. Stock Quote
Kinder Morgan, Inc.
KMI
$16.98 (1.31%) $0.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.