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Kinder Morgan Inc stock get boost as Warren Buffet takes stake

Warren Buffett's portfolio is closely watched by investors for clues into how the billionaire chairman and his backup stock pickers are thinking. Newly disclosed holdings often send shares higher.

Warren Buffett’s Berkshire Hathaway Inc. added an investment in Kinder Morgan Inc. during the fourth quarter, snapping up shares from the pipeline operator since it’s market price plunged.

Shares in Kinder Morgan were up almost 10 % at US$17.16 in trading Wednesday.

Berkshire held 26.5 million shares of the company as of Dec. 31, based on a regulatory filing Tuesday disclosing U.S. stock holdings. The stake was valued at $395.9 million at the end of 2015.

Bloomberg

Kinder Morgan’s shares fell 65 percent this past year amid a slump in energy prices. The organization, which hauls oil and gas through a pipeline network long enough to circle the world 3 times, slashed its dividend in December for the first time to avoid a credit downgrade to junk status. The Houston-based company also said last month that it may sell assets to raise cash.

“It strikes me as a business that’s right up his alley,” said Jeff Matthews, an investor and author of Buffett-related books. “It’s a business that’s likely to last for quite a long time,” he said. And also the stock has “gotten crushed,” creating an opportunity to buy at an attractive price.

Oil drillers, gold miners and rig operators have sacrificed dividends to save cash amid tumbling prices in oversupplied commodity markets. When Kinder Morgan cut its dividend, it pledged not to issue any new shares with the end of 2018.

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