Warren Buffett’s Commodity Stock Picks

Warren Buffett–the Oracle of Omaha–is one of the world’s most renowned investors, heralded for his simple yet effective valuation methods. As such, followers of the legendary investor pay close attention to when Buffett places big bets, and they hope that by following his stock picks, they will cash in on Buffett’s guru-like instincts [for more commodity stock news and analysis subscribe to our free newsletter].

In the commodity space, however, Buffett has been quite vocal about his aversion to certain commodities- namely gold; however, Buffett does have meaningful exposure to commodity producers that are involved in a wide array of industries, including oil and gas, solar power, and agriculture. And according to Berkshire Hathaway’s most recent 13F filing, Buffet holds stakes in five commodity producer stocks. For those looking to follow the legendary investor’s picks, we highlight Berkshire’s five commodity stock holdings:

Phillips 66 (PSX)Warren Buffett

Berkshire Hathaway currently owns over 27 million shares in this Texas-based, independent downstream energy company – which amounts to a holding value of over $1.58 billion. Phillips 66 is a recent spin out from energy giant ConocoPhillips (COP), and now houses the refining, marketing, midstream and chemicals businesses that used to be part of the parent company [see also 5 Of The Biggest Oil Finds In History].

As of February 2013, Phillips owns roughly 15,000 miles of pipeline systems and 10,000 owned or supplied branded marketing outlets across the U.S.,  Europe, and Asia. In its midstream business, Phillips transports, fractionates, and markets natural gas liquids in the United States. From a technical perspective, the company’s stock also features a relatively attractive dividend yield of 2.15% based on the stock’s most recent closing price and its annual payout of $1.25.

ConocoPhillips (COP)

Berkshire also owns more than 24 million shares in Phillip 66′s parent company, ConocoPhillips (COP). ConocoPhillips is an international integrated energy company that focuses on crude oil, natural gas, natural gas liquids, liquefied natural gas and bitumen.

The company operates throughout North America, Europe, Asia and Australia, and currently has operations and activities in 30 countries. In 2012, the ConocoPhillips produced 1,578 thousand barrels of oil equivalent per day and had proved reserves of 8.6 billion barrels of oil. Its stock also feature an attractive yield of 3.92%, based on the company’s annual payout of $2.76.

Suncor Energy Inc. (SU)

Another independent oil and gas company, Suncor Energy is heavily involved with the Athabasca oil sands, a deposit that holds 1.7 trillion barrels of bitumen. In addition to exploring and developing Canada’s Athabasca basin, the company also markets, refines, and transports oil and natural gas throughout Canada and internationally.

Berkshire Hathaway currently holds more than 17 million shares of the  Calgary-based company – a holding value of more than $638 million, or a 1.18% stake in the company [see also The Trillion Dollar Commodity Investment You Are Missing].

Deere & Co. (DE)

Given Buffett’s admiration of all things agriculture, this pick is perhaps not surprising. Deere & Co. is a leading manufacturer of agricultural and turf equipment, as well as related service parts. DE makes everything from tractors and ATVs, to combine harvesters and balers.

The company also has a long track record of delivering value to shareholders in the form of dividends and share buybacks; currently the stock yields 2.41% based on its annual payout of $2.04. Berkshire Hathaway holds a little under 4 million shares of this stock, which amounts to a holding value of over $336 million.

National Oilwell Varco, Inc. (NOV)

Capturing roughly 60% of the market share in its industry, National Oilwell Varco is one of the leading names in the oil and gas equipment and services space. The company was founded in 1862 and is headquartered in Houston, Texas. Its operations are segmented into three main categories: rig technology, petroleum services, and distribution and transportation [see Buffett Increases Holdings In This Oil & Gas Stock].

Some of the company’s most successful products include offshore and onshore drilling rigs, oilfield tubular goods, drill string equipment, as well as extensive lifting and handling equipment. One of the most attractive features of NOV is, however, the company’s business model, which allows it to generate profits no matter what condition the oil and gas drilling industry is currently in. Given its proven track record, Berkshire recently upped its stake in the company to over 8.8 million shares, a roughly 2.08% stake in the company.

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Disclosure: No positions at time of writing

About Daniela Pylypczak

Daniela Pylypczak-Wasylyszyn is a regular contributor to CommodityHQ.com, where she primarily focuses on commodity producers equities. She is also an analyst for ETFdb.com, where she contributes articles and analysis each week. Since joining the team in 2011, Daniela has quickly grown to be one of the most widely-followed authors in the industry. Her articles are syndicated in a number of online publications, including Financial Advisor Magazine, Fidelity.com, and Yahoo! Finance. Daniela is also a contributor for TraderHQ.com and Dividend.com. Daniela graduated from DePaul University with a bachelor’s degree in finance and economics.
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