Oil and Gas

UPDATE 3-Buffett's Berkshire raises oil bet with Kinder Morgan stake

(Adds details on Kinder Morgan, Phillips 66)

Feb 16 (Reuters) - Warren Buffett’s Berkshire Hathaway Inc on Tuesday disclosed a new investment in pipeline operator Kinder Morgan Inc, boosting its bet on the oil industry as crude prices hover near 12-year lows.

Berkshire owned about 26.53 million Kinder Morgan shares worth roughly $395.9 million at year end, according to a U.S. Securities and Exchange Commission filing detailing its U.S.-listed stock investments.

Shares of Kinder Morgan rallied in after-hours trading, rising $1.08, or 6.9 percent, to $16.70. They had closed up 66 cents at $15.62 in regular trading.

It is unclear whether Buffett or one of his portfolio managers, Todd Combs and Ted Weschler, invested in Kinder Morgan, though investments of this size are often not Buffett’s.

Nonetheless, investors often view such disclosures as a signal of where Buffett and his deputies see value.

Berkshire has also been boosting its stake in Phillips 66 , and as of Friday had spent $1.08 billion this year on the oil refiner’s stock. That gave it a 14.3 percent stake now worth about $5.91 billion.

Kinder Morgan shares have fallen by nearly two-thirds since April as falling oil prices cut into profitability.

That plunge has prompted the Houston-based company to lower capital spending, and in December cut its dividend for the first time.

“KMI has many of the qualities Buffett looks for in his investments, including stable, fee-based assets which generate significant amounts of cash flow,” Morningstar Inc analyst Peggy Connerty said in an email, referring to Kinder Morgan’s ticker.

Given the stock price decline, and Kinder Morgan’s plan to improve its balance sheet without issuing new shares this year, “for a long-term oriented investor KMI is a decent name to own,” she said.

Kinder Morgan spokeswoman Melissa Ruiz said: “We are pleased that others see the value in the company that we see.”

According to Tuesday’s filing, Wells Fargo & Co remained Berkshire’s biggest U.S. stock holding at $26.08 billion, followed by Kraft Heinz Co at $23.69 billion.

A stake in International Business Machines Corp declined by nearly $600 million in the quarter to $11.15 billion.

Berkshire also reported boosting its share stake in Deere & Co and cutting its share stake in AT&T Inc.

Berkshire also owns roughly 90 businesses including the BNSF railroad, Dairy Queen ice cream, Fruit of the Loom underwear and Geico auto insurance. It paid about $32 billion last month for industrial parts maker Precision Castparts Corp. (Reporting by Jonathan Stempel in New York; Editing by Jonathan Oatis and Lisa Shumaker)