Buffett takes $3.7 billion stake in Exxon Mobil

[ajc]

"Warren Buffett's conglomerate Berkshire Hathaway owned a stake of about 40 million shares in oil major Exxon Mobil as of the end of September, according to an SEC filing on Thursday.

Based on the most recently available holdings data, that would be enough to make Berkshire the 6th-biggest holder of Exxon shares, with about one percent of the shares outstanding.

The stake was worth $3.74 billion at Thursday's closing prices..."

http://www.cnbc.com/id/101128782

[CorpRaider]

That's big enough that its probably a WEB buy, no?  Looks like Yacktman has been buying as well.  Bmichaud and I were just talking about XOM…probably while he was buying.  I sucked my thumb.  Oh well.

[Palantir]

I was looking at it too.... I like its cannibalistic tendencies.

[Aberhound]

The longer I hold it the more I like management. Gains are lumpy but average out well over time. Through Esso they have produced oil at Norman Wells for decades past when the oil was supposed to run out. I wonder how many of their holdings are like that.

[bmichaud]

I cover the stock for my firm - Buffett must've seen my recent report rating it a buy with a 16% projected 5y IRR

XOM is the Berkshire of big oil - not a care in the world for quarterly results, focus on the extreme long term and high roc, minimal debt and laser-like capital allocation.

I've long wondered why BRK hasn't owned this. Not sure why WEB wasn't buying in 2010 when it was below $60....not much has changed since then save the share count.

Also have wondered why BRK doesn't have MCD has a top holding. Perhaps just a matter of time.

[boilermaker75]

I cover the stock for my firm - Buffett must've seen my recent report rating it a buy with a 16% projected 5y IRR

XOM is the Berkshire of big oil - not a care in the world for quarterly results, focus on the extreme long term and high roc, minimal debt and laser-like capital allocation.

I've long wondered why BRK hasn't owned this. Not sure why WEB wasn't buying in 2010 when it was below $60....not much has changed since then save the share count.

Also have wondered why BRK doesn't have MCD has a top holding. Perhaps just a matter of time.

I agree about MCD. It is a long-term holding for me.

[giofranchi]

Not sure why WEB wasn't buying in 2010 when it was below $60....

I bought it then! Later I sold it booking substantial profits. Probably, a bad decision… but, really, what do I know about something so BIG?!

Damn!! As time passes, I find my circle of competence shrinking instead of getting larger… Because I keep requiring to know more and more about a business, before accepting it inside… The net result is an “outflow” of businesses from my circle of competence, instead of an “inflow”…

Gio

[rkbabang]

Interesting.  I bought XOM in 2010 for $59 then sold a little more than a year ago for $88.  Unlike the market in general it hasn't done much in the last year.  It doesn't look undervalued to me right now the way it did in 2010.  I'd rather own BRK than follow him back into XOM.

[boilermaker75]

Interesting.  I bought XOM in 2010 for $59 then sold a little more than a year ago for $88.  Unlike the market in general it hasn't done much in the last year.  It doesn't look undervalued to me right now the way it did in 2010.  I'd rather own BRK than follow him back into XOM.

After seeing XOM was the secret stock, I took a quick look this morning and it does seem expensive. An enterprise value of $392B with a TTM FCF of $12.6B. Capital expenditures seem to eat a lot of the operating earnings each year. FCF was $40B in 2008, but the highest it has been since then was $24.4B in 2011.

I'm sure it will be a home run for Buffett, but I don't know why.

[blainehodder]

EBIT/Tev (one of the best if not the best predictors of returns in general) had it in the cheapest decile of >10B US equities when Buffett was buying.  Add to that the fact that they are the low cost producer, a history of strong capital allocation, a history of strong returns on capital, and a rock solid balance sheet.  Bonus points for oil as a bit of an inflation hedge if CPI picks up. That is a recipe for success.

Pretty consistent with Wesley Gray/Greenblatt research.