What Does Warren Buffett’s Purchase Say About Phillips 66?

Shares of Phillips 66 (PSX) have jumped today after it sold one of its units to Warren Buffett’s Berkshire Hathaway (BRK.B). Are investors reaching the wrong conclusion?

Bloomberg

Here’s what happened: Phillips 66 said that it had sold its specialty products unit to Berkshire Hathaway for $1.4 billion. Berkshire, however, chose not to pay for the division with cash, which would have been easy considering its cash hoard, but in shares of Phillips 66–19 million shares that Berkshire already owns. Could that be sign that Buffett thinks shares of Phillip 66, which have gained 45% this year, have run too far?

Now Berkshire has done a lot of portfolio management in the energy sector this year. For instance,  it bought oodles of Exxon Mobil (XOM) in November, while offloading some 20 million shares of ConocoPhillips (COP)–and it takes smarter folks than me to explain why.

Still, it’s something to think about heading into the New Year.

Shares of Phillips 66 have gained 3% to $76.94 today at 11:41 a.m., while Exxon Mobil has advanced 0.6% to $100.92, ConocoPhillips has risen 1% to $70.58 and Berkshire Hathaway is up 0.4% to $118.52.