Warren Buffett buys stake in Exxon Mobil, Nestle

10:50, November 18, 2009      

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Warren Buffett's Berkshire Hathaway Inc took stakes in Exxon Mobil Corp and Nestle SA, betting on the world's biggest oil and food companies.

Berkshire held about 1.28 million Exxon shares and 3.4 million American depositary receipts of Nestle at the end of the third quarter, the Omaha, Nebraska-based company said in a regulatory filing.

The stake in Irving, Texas-based Exxon would be worth about $95 million, based on Monday's stock price, while the Nestle holding would be valued at $161.5 million. Berkshire also raised its stake in Wal-Mart Stores Inc, the largest retailer.

"Berkshire is increasingly looking for companies that are world-leading brands," said Tom Russo, partner at Gardner Russo & Gardner, which holds shares in Berkshire and Vevey, Switzerland-based Nestle.

Buffett is drawing down Berkshire's cash hoard to invest in some of the world's biggest firms as credit markets improve. The $2.23 billion spent on stocks in the three months ended Sept 30 is the most in a year and allowed Berkshire to add a stake in insurer Travelers Cos and increase its holding of Wells Fargo & Co. Buffett agreed this month to take over Burlington Northern Santa Fe Corp, the No 1 US railroad, for $26 billion.

"They are all very unique and strong franchises," said Mohnish Pabrai, founder of Irvine, California-based Pabrai Investment Funds, which owns shares in Berkshire and San Francisco-based Wells Fargo.

"The equity bets are tending to be ones which can be held for a very long period of time."

Berkshire, whose US stock portfolio was valued at $56.5 billion at the end of the third quarter, is benefiting from the biggest rally in the Dow Jones Industrial Average since 1933.

The addition of Exxon and New York-based Travelers gives Berkshire equity stakes in 11 of the Dow's 30 companies.

The 113-year-old Dow has surged 59 percent since March 9, the steepest run-up over the same number of days since 1933, according to data compiled by Bloomberg. Travelers, which was added to the Dow this year, has gained 58 percent over that period, while Exxon is up 15 percent to give the firm a market value of $353 billion.

"Exxon has probably the lowest cost structure in the industry, which I know is attractive to Buffett," said Philip Weiss, a senior analyst at Argus Research Corp. "No matter where oil prices go, Exxon always fares better."

Stock picks by Buffett, the second-richest American, are watched by mutual funds and individuals looking for clues about his investment strategy. Berkshire's biggest stockholding is an investment in Coca-Cola Co worth about $10.7 billion.

The firm's holding in Wal-Mart rose 90 percent in the third quarter and is valued at about $2 billion.

Source:China Daily
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