Buffett Bets on Oil

While many contrarian investors are predicting a correction in the red-hot energy sector soon, the legendary Warren Buffett laid a bet that the streak will go on.

Buffett's holding company, Berkshire Hathaway (BRKA Quote), revealed a 17.9 million-share stake in ConocoPhillips (COP Quote) in its quarterly regulatory filing on Monday. The investment comes from the world's preeminent value investor, even after shares of the oil company have rocketed 13% so far this year, after adding a whopping 52% last year.

"I doubt that [Buffett] thinks ConocoPhillips is a screamingly cheap company," says Glenn Tongue, managing partner with T2 Partners. "He probably thinks it's a predictable asset-rich company that will grow in value far in excess of what his costs of financing are. That rationale goes along with some of Berkshire's previous investments like Wal-Mart (WMT Quote) and Wells Fargo (WFC Quote)." ...