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

I'm confused at XOM's stock performance, so why buy?


Exxon Mobil Corp. (NYSE:XOM)Last week Warren Buffett revealed that he bought a cool $3.7 billion 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?” 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 Contributor Aaron Levitt’s take on Buffett’s move here.

Article printed from InvestorPlace Media,

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