Warren Buffett's Berkshire Hathaway Inc. (NYSE:BRK-A) has gas and plenty of it, by way of a $4.5 billion stake in Phillips 66 (NYSE:PSX), the largest U.S. oil refiner.
That means Nebraska-based Berkshire is now the largest shareholder in Phillips 66, owning more than 58 million shares of the refiner, up from a stake of 7.5 million shares at the end of the first quarter. Berkshire's increased stake in Phillips 66, which was spun off from ConocoPhillips (NYSE:COP) in 2012, comes at a time when lower oil prices are helping refiners sharply outperform the rest of the downtrodden energy sector.
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Lower oil prices reduce crack spreads, which work in favor of refiners. Investors can play that theme while following the Oracle of Omaha into shares of Phillips 66 with several ETFs with health weights to the refining giant.
The Market Vectors Oil Refiners ETF (NYSE:CRAK), which debuted on August 19, is the first dedicated refiners ETF. CRAK tracks the Market Vectors Global Oil Refiners Index (MVCRAKTR). That index is cap-weighted, giving CRAK one of the largest weights to Phillips 66 of any ETF. Coming into Monday, the stock was CRAK's largest holding at a weight of 8.6 percent.
Refiners benefit when oil prices slide due to lower crack spreads, perhaps the inspiration for CRAK's ticker, and the few ETFs with robust refiners exposure have been noticeably less bad this year than traditional equity-based energy sector counterparts.
Highlighting refiners'sensitivity to higher oil prices, CRAK is off about 4 percent since coming to market because oil futures have surged over that period.
Oil & Gas E&P
The $411.7 million iShares U.S. Oil & Gas Exploration & Production ETF (NYSE:IEO) is another ETF with a healthy weight to Phillips 66. IEO has a weight of 8.4 percent to the stock, making it the ETF's third-largest. IEO is not a dedicated refiners fund, but its 26 percent weight to downstream companies is well above that of standard energy ETFs. Including Phillips 66, IEO has four refiners among its top 10 holdings.
That does not mean IEO is perfect, it just means the ETF has been less bad than traditional energy ETFs. IEO is down 14.9 percent year-to-date while the Energy Select Sector SPDR (NYSE:XLE) is off 16.3 percent.
Speaking of less bad among energy ETFs this year, that is exactly what the PowerShares Dynamic Energy Exploration & Production Portfolio (NYSE:PXE) has been with a loss of 8.4 percent. Prior to CRAK's debut, PXE was a suitable stand-in for a refiners ETF with its three largest holdings, including Phillips 66 in the second spot, being refiners.
The $84.2 million PXE's 30 holdings are selected based on a variety of investment merit criteria, including: price momentum, earnings momentum, quality, management action, and value, according to PowerShares.
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