Berkshire Hathaway Inc. reported holding a stake in Exxon Mobil Corp. valued at more than $3.7 billion as Warren E. Buffett's company disclosed its largest new investment since International Business Machines Corp. in 2011.
Mr. Buffett's company owned 40.1 million shares of Exxon on Sept. 30, Berkshire said Thursday in a regulatory filing. The world's biggest oil company by market value was up 1.4% to $94.52 at 8:36 a.m. in early trading Friday.
Berkshire has benefited this year as its stock picks rallied along with the broader market, affirming a strategy of favoring equities instead of bonds amid near-record-low interest rates. Mr. Buffett has tracked Exxon and bought its stock in the past, holding a stake in the producer as recently as 2011.
Exxon Mobil “is undervalued, in his opinion, and pretty much being ignored by the market,” said David Kass, a professor at the University of Maryland's Robert H. Smith School of Business, who has taken students to meet Mr. Buffett in Omaha. “He knows the company. He knows it well.”
Exxon had advanced 7.7% this year through Thursday's close, trailing the 26% surge in the Standard & Poor's 500 Index.
About three-quarters of the Exxon holding was added in the three months ended June 30, according to a separate filing Thursday. Berkshire requested confidential treatment in an August document detailing its portfolio at the end of the second quarter. The Securities and Exchange Commission sometimes allows companies to withhold information from the public to limit copycat investing.
ENERGY WAGERS
Mr. Buffett, Berkshire's chairman and chief executive for more than four decades, has had successes and blunders betting on energy. He booked profits in 2007 as he sold stock in PetroChina Co. after the shares rose more than eightfold since Berkshire's $488 million investment in 2003.
In 2009, Berkshire posted its worst quarterly loss in at least two decades, fueled by a charge on the decline of oil producer ConocoPhillips. Mr. Buffett said he made a major mistake investing in the company with oil prices near their peak.
Berkshire cut its stake in ConocoPhillips by 44% in the three months ended Sept. 30 to 13.5 million shares, Thursday's filing showed. Mr. Buffett's company also reduced its holding in drugmaker GlaxoSmithKline Plc by 77% to 345,819 American depositary receipts.
Mr. Buffett disclosed two years ago that he had spent more than $10 billion accumulating shares of IBM. He calls Berkshire's investments in the computer-services company, Coca-Cola Co.,
Wells Fargo & Co. (WFC) and American Express Co. his “big four.” Each is valued at more than $10 billion.
Mr. Buffett could have been drawn to Exxon because he hasn't been able to find a big acquisition recently, causing cash to accumulate at his company, Mr. Kass said. The investment also could be beneficial if it's still in the portfolio after Mr. Buffett's no longer leading the company.
Stock in the energy company “certainly does a lot better than sitting in U.S. Treasury bills,” Mr. Kass said. “This is a conservative, safe stock — a nice position for whenever a successor takes over.”
(Bloomberg News)
