The Warren watch is on. Warren Buffett revealed in a SEC filing yesterday that he sold his entire stake in Exxon Mobil (XOM) - roughly four billion dollars worth last quarter.
Investors like to pay attention to what the Oracle of Omaha is doing, given his success rate. Yahoo Finance’s Aaron Task says it’s a big deal that Buffett’s Berkshire Hathaway sold its entire stake. “I think he’s sending either a lack of confidence in Exxon’s management or no confidence that oil prices are going to rise very soon.”
Buffett’s sell came in the fourth quarter of last year when the oil sector was in disarray and prices were collapsing. “You would think at this moment when you have the smaller players, the folks at the margins really struggling, that Exxon would be able to pick up some extra players at a bargain,” says Task. Buffett’s sell-off could indicate a lack of faith that Exxon’s leadership will be able to make such strategic acquisitions at this time. Task also points out that Buffett’s bets are no guarantee. “Let’s also not forget he is not infallible. He got into Exxon maybe at the wrong time.”
According to Bloomberg, Berkshire’s latest filings show a large selloff in the energy sector, energy now makes up only 1.4% of the company’s portfolio-- most of its holdings are situated in financials and consumer staples.
Still, Berkshire increased its position in Phillips 66 (PSX) by 365,000 shares (though its position in the company is relatively small). Task says it’s not a blanket sell-off in the energy sector for these big hedge fund managers. Some see risk in energy while others see opportunity. “You also have George Soros who sold out of Exxon as well. You have Leon Cooperman, he’s bought Laredo (LPI), sold SandRidge (SD). Dan Loeb at Third Point - he’s buying Phillips 66. Bruce Berkowitz at Fairholme, he’s buying Canadian Natural Resources (CNQ). David Einhorn sold his big stake in BP (BP).” Third Point went from no stake in Phillips 66 to 5 million shares, making it one of the top 20 shareholders in the company.
The large takeaway here, says Task, is that a lot of big names in Hedge Funds are becoming less bullish on the U.S. and are moving towards Europe and Asia.
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