Buffett Makes His First Major Investment In 2020. Here’s Why

Warren Buffett has finally dug into his investing checkbook into 2020 and purchased his first big investment. In this video I want to explain what it is and why Buffett bought it!

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For those who have been following Warren Buffett like myself you will know that he has not bought any major stocks in 2020. On the other hand he’s done a lot of selling this year. He sold completely out of his airline stocks. He sold a lot of his bank stocks and a range of others. But buying stocks nah, he hasn’t really done anything. That is up until now.
I don’t know if you guys have heard the news, but finally Warren Buffett is reaching into his checkbook, for a $10 billion dollar deal in Dominion Energy’s natural gas assets.

Ok so that might sound confusing to some people so let me break that down. Dominion Energy is an energy stock that supplies electricity for some parts of the USA as well as natural gas to other parts of the USA.

However Dominion energy have made it clear that they’re trying to become a company that focuses on clean energy production. So this means that they’ve got a whole natural gas section that they’re willing to sell.
Warren Buffett comes along. He see’s this natural gas business for sale. A business in which he is already in. And he decides to buy it, at a price that he found appropriate!

So what he did was he put in $4 billion dollars and assumed $5.7 billion in debt to buy the natural gas transmission and storage assets of Dominion Energy. So that deal almost comes to a total of $10 billion dollars.

Now the interesting thing, is that Warren Buffett was already in the natural gas business before he bought these assets from dominion energy. Before this Buffett’s Berkshire Hathaway owned 8% of all interstate natural gas transmission in the United States. After this buy, this number has increased to 18% largely increasing their footprint in the natural gas energy business.

So I want to quickly go over the details of this purchase from Buffett, before we get into the reasons why Buffett made this purchase, and finally opened his investing Wallet this year.

So what exactly did Buffett’s Berkshire buy? Alright they acquired 100% of Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission and they bought 50% of Iroquois Gas Transmission System. Berkshire will also now own 25% of Cove Point LNG, which is an export-import and storage facility for natural gas based in the United States.
All included it’s 7,700 miles of natural gas storage and transmission pipelines and about 900 billion cubic feet of gas storage.

So that’s the facts of the acquisition but let’s get into the reasons why, which to me is absolutely fascinating. We all know that right now in the stock market, it’s not easy to find a good deal. Most things are selling at a premium price tag and that’s to say the least. But it does not matter what market condition that you are in, there will always be opportunities. And I don’t know if you remember a couple of months ago, there was a big crash in both the price of oil and natural gas. I mean in just a few months oil went from $60 a barrel to $18 a barrel. Because obviously of the lock-down situation that the world was and is facing. Same with natural gas it went from being priced at $2.80 to a $1.40.

This left a range of very cheap stocks in this particular sector. And I actually made a video on this in late April. On 3 cheap oil stocks to buy. By the way the interesting thing was I got a lot of hate in this video on the stocks that I recommended. Just go check out the comment section if you want. Yet the stocks that I mentioned are actually doing very well. Ones up 65%, the others up 18%, and the others actually down 3%. It just shows never go with the crowd, go with your calculated decision based on the facts.

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DISCLAIMER: It's important to note that I am not a financial adviser and you should do your own research when picking stocks to invest in. These are just some of my viewpoints, by no means would I recommend watching one YouTube video and then immediately buying that stock. This video was made for educational and entertainment purposes only. Consult your financial adviser.