Back in April, ConocoPhillips (COP) split off Phillips 66 (PSX) to create a company focused on upstream exploration and production. The ultimate goal was to release the company from the regulatory and margin pressures common in the refining business of the new Phillips 66.
A few months after the split, Buffett's investment arm of Berkshire Hathaway Inc. (BRK.B) famously increased investments in Phillips 66, to the surprise of most. The refining business has long been suffering due to low cost foreign imports and domestic regulations. Buffett and others though were interested in the potential of the chemicals and pipeline division. As we highlighted back then, the majority of the profits in that company will be derived from the refining arm for the foreseeable future.
So was Buffett right to invest in Phillips 66?
Read the full article at Seeking Alpha.
Disclosure: Long COP. Please review the disclaimer page for more details.