Buffett Buys ExxonMobil: That Has to Be Smart…Right?

by Ed Elfenbein | November 19, 2013 4:32 pm

Buffett Buys ExxonMobil: That Has to Be Smart…Right?

ExxonMobilLogo Buffett Buys ExxonMobil: That Has to Be Smart...Right? Last week Warren Buffett revealed that he bought[1] a cool $3.7 billion[2] worth of ExxonMobil (XOM).

That’s about 1% of the total company. Non-professional Investors should take note that Buffett is buying a blue-chip stock which hasn’t done very well. So many investors think you should only buy stocks near their highs.

I’ve been puzzled by XOM’s poor performance. Just a few weeks ago, I did a blog post asking “What Happened to ExxonMobil?[3]” Since the beginning of the bull market in 2009, XOM has not only lagged the S&P 500, but it’s lagged the Energy Sector as well. I noted that if XOM had merely kept pace with the S&P 500, their market cap would be over $700 billion today.

So is it a buy now? I’m on the fence. I think the stock is cheap but I can’t say how strong the long-term potential is. But if Buffett is doing it, then it’s probably a very smart move.

Read InvestorPlace [4]Contributor Aaron Levitt’s take on Buffett’s move here[5].

Endnotes:
  1. he bought: http://BillionaireinvestorWarrenBuffettboughtahugestakeinExxonMobildespiteit
  2. $3.7 billion: http://www.usatoday.com/story/money/markets/2013/11/14/berkshire-hathaway-discloses-exxon-mobil-stake/3554859/
  3. What Happened to ExxonMobil?: http://www.crossingwallstreet.com/archives/2013/10/what-happened-to-exxon-mobil.html
  4. InvestorPlace : http://investorplace.com/
  5. here: http://investorplace.com/2013/11/exxon-mobil-buffett-xom-brkb/#.Uou2RSf-L08

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