Author Topic: Buffett takes $3.7 billion stake in Exxon Mobil  (Read 27911 times)

bmichaud

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1593
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #40 on: November 17, 2013, 10:55:08 AM »
I think MCD is not a top holding, because eating habits change more than drinking habits and MCD owns a lot of real estate.


That's probably right regarding habits, but to the degree that would imply that is why WEB avoids it,
I'm not so sure about. MCD has grown 6% a year for a very long time while returning over 80% of earnings to shareholders, thus implying extremely durable moat. Perhaps KO is at 7% and 90%?? Not sure. But the difference is negligible, especially from a valuation perspective when MCD was under operational pressure in the early 2000s. 

Are you saying the RE is a negative for MCD from WEB's perspective?


racemize

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2729
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #41 on: November 17, 2013, 12:55:12 PM »
I have heard him say that there's no taste memory for soda (applied to KO) whereas there is taste memory for burgers (applied to MCD).  Not sure how much that is really influencing the decision though.

wellmont

  • Guest
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #42 on: November 17, 2013, 12:58:15 PM »
I don't think it's about burgers. I think it's about the company. He owns dairy queen. doesn't own mickeyDs.  He's very choosy about where he puts his money. For example, he owns tons of WFC in brk. But only owns some JPM in his PA.

ItsAValueTrap

  • Hero Member
  • *****
  • Posts: 1945
    • Blog
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #43 on: November 17, 2013, 01:07:04 PM »
If you look at the history of the restaurant industry, the top #10 list changes rapidly over the decades.  The wonderful business don't always stay wonderful.  I think that the restaurant business is highly management-driven.

With consumer foods, the top #10 list doesn't change nearly as much.
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. " -Buffett

my blog

Mephistopheles

  • Hero Member
  • *****
  • Posts: 1566
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #44 on: November 17, 2013, 02:38:21 PM »
In a speech once (I think at University of Florida - it's on YouTube), someone asked him this and he compared KO and MCD. He said he likes KO better because it has better pricing power. He said MCD has to give out prize goodies (such as happy meals) in order to drive customers in, and to that degree Burger King has to do the same, and in that way they are very competitive with each other. In that same speech he mentioned how Cola has no taste memory.

EDIT: Here's the speech. http://www.youtube.com/watch?v=DfuXKpMFUjc

WhoIsWarren

  • Sr. Member
  • ****
  • Posts: 288
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #45 on: November 17, 2013, 02:40:09 PM »
If you look at the history of the restaurant industry, the top #10 list changes rapidly over the decades.  The wonderful business don't always stay wonderful.

That's an interesting observation.....one that I wouldn't have guessed if you'd asked me.  Can you point me to where I might read some more about this?

Charlie

  • Sr. Member
  • ****
  • Posts: 295
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #46 on: November 17, 2013, 07:04:17 PM »
"Are you saying the RE is a negative for MCD from WEB's perspective?"

yes, ROE of real estate is not good.

Buffett owned McDonald´s probably when there was a lot of growth ahead.

fareastwarriors

  • Hero Member
  • *****
  • Posts: 3543

fareastwarriors

  • Hero Member
  • *****
  • Posts: 3543

enoch01

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 555
  • https://twitter.com/eenoch01
Re: Buffett takes $3.7 billion stake in Exxon Mobil
« Reply #49 on: November 20, 2013, 09:23:48 AM »
http://www.bloomberg.com/news/2013-11-20/warren-buffett-s-exxon-bungle.html


Warren Buffett's Exxon Bungle

Haha, he can't be serious.

Quote
Regardless, not counting dividends, that original ~$173 million dollar purchase would be worth about $3 billion today. That’s a back of the envelope return of 1,946 percent. And while a 44 percent return is good, a 1,946 percent return is better.

XOM has compounded about 11% per year since Buffett's sale in 1985.  What's the problem again?