Friday 20 April 2018

Buffett's Berkshire buys new Exxon Mobil stake

DEAL: Warren Buffett's Berkshire
DEAL: Warren Buffett's Berkshire

Warren Buffett's Berkshire Hathaway has disclosed a new $3.45bn stake in Exxon Mobil after buying 40.1 million shares in the world's largest publicly traded oil company.

Although the investment represents just 0.9pc of Houston-based Exxon's shares, analysts said it reflects strong support by the second-richest American of one of the world's largest and most profitable companies.

"When Warren Buffett gives his seal of approval to any company, that is never a bad thing," said Pavel Molchanov, energy analyst at Raymond James & Associates, who rates Exxon shares a "strong buy."

Exxon shares rose 84 cents, or 0.9pc, to $94.06 in after-hours trading following Berkshire's disclosure of its stake in a U.S. Securities and Exchange Commission filing that listed most of its equity investments as of September 30. The shares had risen 63 cents during regular trading.

"He likes buying big, established global brand names, and Exxon is a good flight-to-quality stock," said Fadel Gheit, senior oil analyst at Oppenheimer & Co, referring to Buffett. "The stock has also lagged the market in the last three and five years. That makes it a typical Warren Buffett holding."

Gheit has a "perform" rating on Exxon.

Berkshire already has energy and utilities businesses, including MidAmerican Energy, which is spending $5.6 billion to buy Nevada utility NV Energy Inc (NVE.N).

U.S. regulators require large investors to disclose their stock holdings every quarter, and the disclosures can offer a window into their strategies for buying and selling stocks.

Buffett sometimes gets SEC permission to delay disclosures so that he can buy stocks without having investors copy him.

He did this for the second quarter of 2013, and revealed on Thursday that Exxon purchases took place during that period.

"We appreciate the confidence investors have in ExxonMobil when they decide to invest in the company," Exxon spokesman Alan Jeffers said in an email.

Berkshire last reported owning Exxon shares in late 2011.

Debbie Bosanek, an assistant to Buffett, did not immediately respond to a request for comment.


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