NEW YORK (Bloomberg) - Warren Buffett's Berkshire Hathaway exited a US$3.7 billion (S$5.02 billion) investment in Exxon Mobil Corp. amid a slump in oil prices.
Crude has fallen by about half since June as U.S. production surged and the Organization of Petroleum Exporting Countries (Opec) resisted output cuts. The decline has ravaged oil company profits and forced major producers and drillers to slash spending and fire thousands of workers.
Buffett built Berkshire into the fourth-biggest company in the world through acquisitions and by picking stocks that surged in value like Coca-Cola and the former Washington Post. 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 US$3.5 billion profit after selling an investment in the oil producer of about US$500 million. That was followed by an ill-timed bet on ConocoPhillips stock before crude prices peaked in 2008, and a US$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 US$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 company traded for an average of US$93.27 in those three months, so Berkshire 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 U.S. stock portfolio at Buffett's company as of Dec. 31.
The changes show that that there are differing views about energy stocks at Berkshire, said Jeff Matthews, a shareholder and author of books about the company. Buffett, 84, has been handing more funds to his back-up stock pickers, Todd Combs and Ted Weschler, as part of his succession plan. The billionaire Berkshire chairman and chief executive officer has said the biggest holdings in the portfolio tend to be his.
"There was clearly no edict that says, 'Oil is terrible, let's get out,'" Matthews said in a phone interview. "Someone has a different opinion about it."