Energy Stocks Surge, Buffett: I Told You So!
Over the last five days, while the $S&P 500(.SPX)$ dipped 0.17%, and tech stocks took a steeper dive, down 2.23% in the $Technology Select Sector SPDR Fund(XLK)$, the energy sector was like a rocket, soaring 2.20% in the $Utilities Select Sector SPDR Fund(XLU)$.
Let's talk about some of the big winners. $Baker Hughes(BKR)$ shot up 7.25%, $Exxon Mobil(XOM)$ gained 4.60%, $Diamondback(FANG)$ and $Marathon Oil(MRO)$ both surged 4.28%, and $EOG Resources(EOG)$ notched a 4.25% increase.
This energy rally wasn't a secret. Some big-time investors had already put their money where their mouth is in oil and gas stocks.
For decades, Warren Buffett, the chairman and CEO of $Berkshire Hathaway(BRK.B)$ $Berkshire Hathaway(BRK.A)$, has stuck to a cautious investment strategy, favoring retail and banking stocks. So, when he started investing in the volatile energy sector around 2020, it really rocked the market.
Last year, Buffett built a $4.1 billion stake in $Chevron(CVX)$, a nearly 2.5% stake that made the oil giant Berkshire's 10th largest holding. Since then, Buffett's energy investments have gone from strength to strength. Berkshire Hathaway spent $434.8 million to increase its stake in $Occidental(OXY)$ this month through Thursday.
Buffett's rapid succession of oil stocks has aroused curiosity. Apart from the fundamentals of the stocks, he's bullish on the industry: oil's scarcity and strategic importance, plus the market's pessimism offering great deals and opportunities to buy low.
Even Buffett's partner, Charlie Munger, said that oil will remain a precious resource for the next 200 years, and oil assets are even more valuable than US Treasury bonds.
Energy analyst Ben Cook added：
Many energy companies are reducing debt, repurchasing shares, and raising dividends. Plus, with WTI crude oil prices expected to hover between 80 and 85 for the rest of this year and next, oil companies are doing just fine.
And with the AI hype driving a surge in electricity demand, all forms of energy are poised for expansion, making investors more optimistic about energy stocks.
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