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What Does Warren Buffett’s Berkshire Hathaway Inc. (BRK.A) See In Chicago Bridge & Iron Company N.V. (CBI)?

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Even though Warren Buffett is not the only mind behind Berkshire Hathaway’s investments these days, with his hand-picked successors making many of the holding company’s new buys, it’s still worth paying attention to what Berkshire Hathaway Inc. (NYSE:BRK.A) is doing. We track quarterly 13F filings from hundreds of notable investors, including Berkshire Hathaway Inc. (NYSE:BRK.A), as part of our work developing investment strategies (we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year). In its 13F for the first quarter of 2013 (see the full list of Buffett’s holdings), one of the largest new picks in Buffett’s company’s portfolio was its 6.5 million shares of Chicago Bridge & Iron Company N.V. (NYSE:CBI), a $6.9 billion market cap company which provides construction and engineering services to power plants and energy infrastructure companies among other customers.

With the shale boom in the onshore U.S., particularly in natural gas and natural gas liquids, there has been a frenzy of activity in building out the infrastructure necessary to support high production as well as to enable export of natural gas onto the world market (where natural gas fetches a higher price than in the supply-rich U.S.). With help from recent acquisition activity, Chicago Bridge & Iron Company N.V. (NYSE:CBI) grew its revenue by 87% in the first quarter of 2013 versus a year earlier, and if we add back acquisition related costs operating income was up by 72%. We would note, however, that the company now faces considerably higher interest expenses as a result of the transaction.

Warren BuffettAnalyst consensus is for $4.20 in earnings per share for this year, which implies a current-year P/E multiple of 15. Earnings are then expected to increase further from that point; as a result; the forward earnings multiple is 13 and the five-year PEG ratio is 0.7. So the sell-side likes the stock as well as Berkshire Hathaway Inc. (NYSE:BRK.A), and we can certainly see a bullish case in which increased energy infrastructure spending drives high demand for Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s services. Berkshire Hathaway Inc. (NYSE:BRK.A) wasn’t the only investor we track buying the stock during Q1. Billionaire David Shaw’s D.E. Shaw reported a position of 1.6 million shares (find D.E. Shaw’s favorite stocks) while Ricky Sandler’s Eminence Capital bought 1.5 million shares of the stock (check out more stocks Sandler was buying).

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