The Berkshire Hathaway Effect: Market Response to Berkshire’s Major Portfolio Change

After the market closed on February 16, 2016, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) reported its equity holdings of U.S. based companies in its SEC 13F filing for the quarter ending December 31, 2015.  This report revealed one major initial investment of about $400 million in oil and gas pipeline company Kinder Morgan (NYSE:KMI).  It is believed that this investment was made by Warren Buffett’s portfolio managers, Ted Weschler and/or Todd Combs.

So how did KMI perform on its first day of trading (February 17, 2016) after release of Berkshire’s 13F filing?

KMI rose by 10.0% ($17.18 + $1.56), substantially outperforming the market averages.  (The S&P 500 rose 1.7% and the Dow Jones Industrial Average rose 1.6%.)

Thus, the “Berkshire Hathaway Effect” of investors closely following Berkshire’s major transactions continues to be observed as it has in previous quarters and years.