Seattle. – Warren Buffett’s Berkshire Hathaway Inc. exited a $3,7 billion investment in Exxon Mobil Corp. amid a slump in oil prices. Crude has fallen by about half since June as US production surged and the Organisation of Petroleum Exporting Countries resisted output cuts. The decline has ravaged oil company profits and forced major producers and drillers to slash spending and fire thousands of workers. Berkshire has “not really had the hot hand in energy”, Fadel Gheit, an analyst for Oppenheimer & Co. in New York, said in a phone interview.
“The whole energy sector is now traded in completely different circumstances than they were only a year ago.”
Buffett built Berkshire into the fourth-biggest company in the world through acquisitions and by picking stocks that surged in value like Coca-Cola Co. and the former Washington Post Co. Still, he’s had a mixed record when it comes to investing in energy companies.
One of his biggest winners was PetroChina Co. In 2007, he booked a $3,5 billion profit after selling an investment in the oil producer of about $500 million.
That was followed by an ill-timed bet on ConocoPhillips stock before crude prices peaked in 2008, and a $2 billion bond investment in Energy Future Holdings Corp. that was later written down as natural gas prices plunged.
Berkshire’s 41,1 million shares of Exxon cost on average $90,86 apiece in 2013, according to the latest annual report. A regulatory filing Tuesday showed Buffett sold the holding during the fourth quarter. The oil firm traded for an average of $93,27 in those three months and could have sold the stake at a profit. Scott Silvestri, a spokesman for Exxon, declined to comment.
Buffett also eliminated a smaller holding in ConocoPhillips while adding to a bet on Canadian synthetic crude oil producer Suncor Energy Inc. and oil refiner Phillips 66, according to the filing, which detailed the US stock portfolio at Buffett’s company as of December 31. – Bloomberg.