Buffett makes big move with Exxon Mobil investment

Berkshire Hathaway, which owns BNSF Railway and three other Fort Worth companies, now has a piece of another big North Texas company.

Warren Buffett’s company disclosed Thursday in a regulatory filing that it owns 40.1 million shares of Exxon Mobil, which owns Fort Worth’s XTO Energy.

The stake is valued at more than $3.7 billion, Buffett’s largest new holding since IBM Corp. in 2011.

Omaha, Neb.-based Berkshire has benefited as its stock picks have rallied this year along with the broader market, affirming a strategy of favoring equities over bonds amid nearly record-low interest rates. Buffett, 83, has tracked Exxon Mobil and bought its stock in the past, holding a stake in the Irving-based energy 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 Buffett in Omaha. “He knows the company. He knows it well.”

About three-quarters of the Exxon holding was added in the three months that ended June 30, according to a separate filing. Berkshire requested confidential treatment in an August document detailing its portfolio at the end of the second quarter. The Securities and Exchange Commission sometimes lets companies withhold information from the public to limit copycat investing.

Exxon boosted oil and natural gas production by 1.5 percent during the third quarter, reversing a two-year stretch of declines. Net income dropped by 18 percent to $7.87 billion as rising crude prices that benefited the company’s oil production business squeezed margins at Exxon refineries.

Buffett, Berkshire’s chairman and chief executive officer for more than four decades, has had successes and blunders betting on energy. He booked profits in 2007 as he sold stock in PetroChina after the shares rose eight times over 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. Buffett said he made a major mistake investing in the company with oil prices near their peak.

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, Kass said. The investment could also be beneficial if it’s still in the portfolio after Buffett’s no longer leading the company.

Stock in the energy company “certainly does a lot better than sitting in U.S. Treasury bills,” Kass said. “This is a conservative, safe stock — a nice position for whenever a successor takes over.”

Berkshire also owns Justin Brands, Acme Brick and TTI in Fort Worth.