Buffett -- February 17, 2021

This is so incredibly cool. Yesterday, over at "Warren Buffett" I asked this question:

• what was he thinking?
• why did he choose VZ and not T-Mobile or ATT?
• why did he choose CVX from among the seven major international integrated oils? That will be an interesting question to explore.

Today, over at CNN Business: what does Warren Buffett see in Chevron? The lede:

Many investors are increasingly hesitant to hold shares of oil and gas companies as a global energy transition gathers steam. 

Not Warren Buffett.What's happening: Buffett's Berkshire Hathaway just disclosed a new stake in Chevron (CVX), the second largest oil firm in the United States. 

The $4.1 billion investment could have been spearheaded by Berkshire investment managers Ted Weschler and Todd Combs. But Buffett still runs the show, and it's a sign that the world's most famous investor sees long-term value in a sector that's taking plenty of heat. 

Chevron shares plunged to their lowest level since 2006 when the pandemic destroyed oil prices last March, and they've failed to fully recover. The company posted a net loss of $5.5 billion for 2020, and its stock is now trading at $93.13, 15% lower than one year ago.

I think Warren still drives himself to work. If not, he has a driver that drives him but he's on the road every day. He sees things others are missing.

European oil majors have been racing to jump on the bandwagon before it's too late. Last week, Shell (RDSA) announced that its oil production has peaked and will now fall every year as it weans itself off fossil fuels. Meanwhile, Wall Street is raising its climate standards. 

On Wednesday, BlackRock — the world's biggest asset manager — told companies that said it would seek to remove directors of companies that don't provide "a credible plan to transition its business model to a low-carbon economy." 

Chevron is not moving as quickly as some of its rivals. The company continues to expand its oil footprint, cutting deals like its $5 billion purchase of Noble Energy last year. 

It has not made major investments in solar and wind beyond supporting its own power needs — and CEO Michael Wirth recently indicated to my CNN Business colleague Matt Egan that is unlikely to change. 

That means a bet on Chevron is a bet that oil demand will fully recover from Covid-19 and remain elevated for decades to come, despite growing public pressure. That's possible, but no longer seen as a given.

I'm 1,000% in Buffett's camp. The EVs I see coming into production are luxury sedans.  

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They Had To Catch A Plane

Around the Bend, John Fogerty