Study of KMI and D
- 07/01/2020 – time to study utility companies
Warren Buffett’s Bet Is a Midstream Buying Signal
Berkshire Hathaway’s long-awaited pandemic-era purchase in a seemingly difficult business might seem like odd timing, but there is good logic behind it
After months of quiet browsing, Warren Buffett has finally found something worth buying.
Berkshire Hathaway BRK.B -0.85% on Sunday announced an agreement to buy Dominion Energy’s D +0.86% midstream energy business for $9.7 billion including debt as Dominion shifts its focus to utilities. The purchase is right in Mr. Buffett’s wheelhouse: an old, out-of-favor sector he knows well.
It probably is no coincidence that Dominion chose to unveil the deal alongside an announcement bidding farewell to its six-year-old Atlantic Coast Pipeline project, which it said faces too much regulatory uncertainty. Such concerns have dogged many high-profile projects. Notably, a federal court Monday ordered the Dakota Access Pipeline to shut down pending an environmental review.
For Dominion, it is a decisive shift away from the oil-and-gas business. Investors don’t seem convinced: While Berkshire’s shares rose 2%, Dominion’s sank 9% by midday.
