Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup
  • Dick Young’s Safe America

The Truth about Warren Buffett’s Investment in Exxon Mobil

October 25, 2017 By Young Research

Berkshire Hathaway CEO Warren Buffett

Most stories on Buffett’s purchase of Exxon Mobil shares are missing the most important point.

If you don’t already know, Buffett’s Berkshire Hathaway recently made public its $3.7 billion stake in Exxon Mobil Corp. The revelation pushed Exxon’s price up, but perhaps markets shouldn’t care so much about what Warren Buffett is buying these days.

You see, Buffett’s investment in Exxon, like his recent investment in IBM, is more a sign of his lack of options than a vote of confidence in these big blue chips. That’s the paradox of investment success, once you’ve been successful for as long as Buffett has, you are such a big player that your portfolio inevitably begins to look like an index fund. You simply can’t invest in small or mid-size stocks without either taking control, or making them a miniscule portion of your portfolio.

So where is Berkshire Hathaway supposed to sink $3.7 billion without taking ownership of a company? Let’s assume that Buffett wants to make an investment in an American company, without becoming an insider (so less than 10% of the company, for a $3.7 billion investment that means a market cap less than $37 billion), doesn’t want to pay more than 20 times earnings, and expects at least a yield of 1.5%. That narrows his options to only 112 companies (according to Google’s stock screener).

Even that number is a stretch because Buffett rarely takes a 10% stake in companies he doesn’t plan on controlling. His investment in Exxon was less than 1% of market cap, and his first announced investment in IBM was 5.5%. With the amount of money Buffett uses to make investments, his universe of possible targets is extremely limited.

Are we saying you shouldn’t invest in Exxon? No, we’re not giving advice on any stock here. But remember that Buffett’s success has made him less nimble than you.  Perhaps the best investment for Warren Buffett may not be the right one for an individual investor nearing or in retirement.

For help finding investment ideas that meet your needs, and to read more about our investment philosophy visit Young’s World Money Forecast.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • The Truth Behind the S&P 500, Part III
  • The Truth Behind the S&P 500: Part IV
  • Your Retirement Life: Investment Planning in One Chart
  • Author
  • Recent Posts
Young Research
Latest posts by Young Research (see all)
  • Happy Martin Luther King Jr. Day! - January 18, 2021
  • Happy New Year! - January 1, 2021
  • Merry Christmas! - December 25, 2020

Search Young Research

Most Popular

  • The Fed is Sacrificing Retirees to Save the Banks
  • Dick Young’s Safe America: Chapter 1, Part I
  • I’ve Been in Richard Young’s Maximizers for Years
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • The Power of a Compound Interest Table
  • Whether Through Audacity or Ignorance, Stock Fundamentals Are Being Ignored
  • The Highest Yielding S&P 500 Stocks
  • Smith Family Robinson in Live Free or Die, NH
  • Jim Simons's Renaissance Technologies vs. Internet Forum Traders
  • February RAGE Gauge: Americans Focusing on What's In Front of Them

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Absentee Ballots Not Verified
  • SARS-CoV-2: Probability of Outdoor Airborne Transmission Very Low
  • Your Personal Safety: Concealed-Carry How to Carry Your Freedom
  • Mostly Peaceful, Ungovernable Protestors
  • Biden’s Inaugural, the Most Confusing, Contradictory, Incoherent Ever?
  • Is the GOP Over? Not Even Close: Here’s Why
  • Impeaching an Ex-President is Unconstitutional
  • Ten Republican Senators to Get Behind
  • Why Do Government Officials Want To Silence Their Opponents?
  • And 2022 Is Right Around the Corner

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Social Media

  • Facebook
  • Twitter
  • Youtube
  • Pinterest

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.