Oil and Gas: The Warren Buffett Trade

I’ve often written about watching insiders and following their lead as a key investment strategy.

You’ll recall Gina Rinehart buying up critical metal stocks like Lynas Rare Earths [ASX: LYC] months ahead of the stock surging this year.

These insiders are often early, which tends to confuse outsiders about their rationale… However, time usually proves insiders correct.

Investment bigwigs employ teams of in-house economists and analysts to review financials, conduct due diligence, and visit sites.

They’re often privy to information that the individual investor could never have.

So, why don’t more investors follow their lead?

In North America, the U.S. Securities and Exchange Commission (SEC) requires large investment managers to disclose their equity holdings every quarter.

It’s known as the 13F filing requirement.

It reveals what the bigwigs are buying, including the number of shares they are acquiring. That allows you to assess a fund manager’s level of conviction in a specific stock or sector theme.

So, if you’re going to glance at these insider filings, why not start at the top, like legendary investor Warren Buffett?

Here’s why you should…

Buffett famously purchased stock in the giant tech company Apple back in 2016.

At the time, observers assumed he was getting into this stock too late; the company’s share price had already swelled by over 700% since the Global Financial Crisis.

Yet Buffett obviously recognised something that these ‘outsiders’ didn’t see: Apple’s formidable long-term earnings moat!

Ultimately, Buffett was right… Apple’s stock price has doubled (several times) since 2016.

But given his unrelenting track record, why don’t more investors follow Buffett’s lead?

The truth is, most are more inclined to follow their lead from a news headline rather than track the world’s most reputable investor. And that’s why they often buy near market tops.

And then sell in a panic as markets fall!

So, why not stack the odds in your favour… Follow the lead of investment insiders.

Buffett’s Buy List

In terms of the Oracle, he currently prefers holding cash over buying more equities.

That itself is a lead worth following… Buffett views the current US market as holding significant risk with limited long-term reward.

However, that doesn’t mean you can’t be an active investor.

In fact, Buffett is still buying stocks; he’s just far more selective in the sectors he’s targeting.

And one of those markets happens to be in the traditional energy market… Oil and Gas Stocks.

In fact, overnight, the Wall Street Journal reported that Warren Buffett’s Berkshire is in talks to buy Occidental Petroleum’s petrochemical business.

Occidental is a US oil and gas firm, and Buffett has gradually increased his stake in the company over the last couple of years.

But according to the WSJ, this deal would be Berkshire’s largest since 2022, at around $10 billion.

While it does target the company’s chemical business rather than its oil and gas segment, Buffett has been actively buying shares in other oil and gas firms, including a sizable stake in Chevron (CVX), a US$325 billion oil and gas giant.

So, why not follow this legendary investor’s lead and add oil and gas stocks to your own portfolio? A market that aligns perfectly with Buffett’s investment philosophy.

In my latest report, I provide a detailed explanation of the ‘energy opportunity’ and outline the stocks you should target as an Australian investor.

You can access it here.

Enjoy!