Warren Buffett's Berkshire Hathaway Inc (NYSE:BRK.A) (NYSE:BRK.B) on Thursday disclosed a new $3.45 billion stake in Exxon Mobil Corp (NYSE:XOM), after buying 40.1 million shares in the world's largest publicly traded oil company.
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Although the investment represents just 0.9 percent of Houston-based Exxon's shares, analysts said it reflects strong support by the second-richest American of one of the world's largest and most profitable companies.
"When Warren Buffett gives his seal of approval to any company, that is never a bad thing," said Pavel Molchanov, energy analyst at Raymond James & Associates, who rates Exxon shares a "strong buy."
Exxon shares rose 84 cents, or 0.9 percent, to $94.06 in after-hours trading following Berkshire's disclosure of its stake in a U.S. Securities and Exchange Commission filing that listed most of its equity investments as of September 30. The shares had risen 63 cents during regular trading.
"He likes buying big, established global brand names, and Exxon is a good flight-to-quality stock," said Fadel Gheit, senior oil analyst at Oppenheimer & Co, referring to Buffett. "The stock has also lagged the market in the last three and five years. That makes it a typical Warren Buffett holding."
Gheit has a "perform" rating on Exxon.
Berkshire already has energy and utilities businesses, including MidAmerican Energy, which is spending $5.6 billion to buy Nevada utility NV Energy Inc (NYSE:NVE).
U.S. regulators require large investors to disclose their stock holdings every quarter, and the disclosures can offer a window into their strategies for buying and selling stocks.
Buffett sometimes gets SEC permission to delay disclosures so that he can buy stocks without having investors copy him.
He did this for the second quarter of 2013, and revealed on Thursday that Exxon purchases took place during that period.
"We appreciate the confidence investors have in ExxonMobil when they decide to invest in the company," Exxon spokesman Alan Jeffers said in an email.
Berkshire last reported owning Exxon shares in late 2011.
Debbie Bosanek, an assistant to Buffett, did not immediately respond to a request for comment.
CONOCO STAKE DECLINES
Buffett typically makes Berkshire's largest investments, while other investments are made by portfolio managers Todd Combs and Ted Weschler. Berkshire's quarterly filings do not reveal who buys or sells what.
The company ended September with $104.9 billion of equities. Its four top holdings - American Express Co (NYSE:AXP), Coca-Cola Co (NYSE:KO), International Business Machines Corp (NYSE:IBM) and Wells Fargo & Co (NYSE:WFC) - totaled $58.4 billion.
During the quarter, Berkshire also reduced by 44 percent its share stake in oil company ConocoPhillips (NYSE:COP).
Through Thursday, ConocoPhillips' stock was up 27.1 percent in 2013, while Exxon rose just 7.7 percent. The Energy Selector Sector SPDR exchange-traded fund (XLE) was up 22.1 percent.
"Buffett is a classic value investor, and Exxon has been an underloved stock in a bull market," Molchanov said. "Exxon is an amazing cash generating machine, which should generate $16 billion of free cash flow this year."
Berkshire also reported higher stakes in Bank of New York Mellon Corp (NYSE:BK), dialysis clinic operator DaVita HealthCare Partners Inc (NYSE:DVA), satellite TV provider DIRECTV (NASDAQ:DTV), Suncor Energy Co (NYSE:SU), US Bancorp (NYSE:USB) and Verisign Inc (NASDAQ:VRSN), which assigns Internet protocol addresses. Its stake in drugmaker GlaxoSmithKline Plc (NYSE:GSK) fell.
Berkshire also owns more than 80 businesses in such areas as insurance, railroads, utilities, chemicals and food. It paid $12.3 billion in June for half of ketchup maker H.J. Heinz Co.
On Thursday, Berkshire's Class A shares rose 0.7 percent to $173,320, and its Class B shares rose 0.8 percent to $115.69.
(By Jonathan Stempel and Luciana Lopez; Additional reporting by Anna Driver; Editing by Gary Hill,Ken Wills and Bob Burgdorfer)