Earlier this week, Berkshire agreed to sell more than 43% of another big holding, Phillips 66, back to the oil refiner for $3.3 billion. The seller was none other than Buffett's Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B). The authority will not be liable for anyone who makes stock portfolio or financial decisions as per the editorial, which is based only on limited and open source information. That's a double-digit discount to that recent high. Instead, according to the billionaire investor, "This transaction was exclusively motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10%". Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
The purchase of the 35 million shares at $93.725 each on Wednesday will leave Berkshire with 45.7 million Phillips shares, about 9.8 percent of the total, the companies said. As cash flow at the mac-and-cheese and ketchup maker improves, the company will have more financial flexibility to invest in product development and to buy competitors.
Berkshire began building its Phillips 66 investment in 2012. Furthermore, the investment company has offloaded some 94.5 percent of its IBM shares, reducing its holdings to 2.05 million shares. At that purchase price, Buffett would have booked a almost 20% gain on this sale. It plans to remain a long-term shareholder. Revenue was $3.21 billion. Acting as the blue chip in today's trade, Berkshire Hathaway Inc.'s existing market cap value showcases its prevailing assets, capital and revenues. Meanwhile, it made excellent progress completing its growth projects, including starting up the Bakken Pipeline, adding more storage capacity at its Beaumont Terminal, and finishing up a $6 billion chemicals expansion along the Gulf Coast with joint venture partner Chevron (NYSE: CVX).More news: Pakistan Bans Charities Linked To Mumbai 'Terrorist' Suspect
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Even with all that progress, Phillips 66 still has plenty of growth left in the tank since it's kept working on expansion projects that will drive cash flow higher in the coming years. The generic drug giant has faced significant headwinds lately, but Berkshire could be well positioned to benefit from the company's planned turnaround. It helps investors in determining whether buying, selling or holding on to a stock would be beneficial for them.
In a note to clients, Raymond James analyst Elliot Wilbur suggested that the disclosure by the Oracle of Omaha's conglomerate of a stake in the drugmaker was rare for "esteemed investors", but added the billionaire could have done so as part of his mission to lower drug prices. Better cash flow could also give Kraft Heinz room to boost its dividend, which already yields a respectable 2.7%. The Return on Equity ratio of Berkshire Hathaway Inc.