From Dan Ferris in Extreme Value:
To be a successful investor, you must think independently. But I'm only human, so it feels great to find a stock you believe is an excellent company with a first-class management, recommend it to your readers, remind everyone when it gets cheap, defend it against numerous critics... and then watch Warren Buffett put close to $100 million into it.
That stock is ExxonMobil.
Don't get me wrong. I'm not saying you should buy everything Warren Buffett buys. But it's hard not to feel good when the most successful investor in history buys a stock you already own.
Buffett bought just shy of 1.3 million shares (worth around $95 million). That's a small position for Berkshire, but he doesn't take his small bets lightly. Buffett doesn't buy unless an investment fits into the four filters he and Charlie Munger have used for decades (as outlined in The Four Filters Invention of Warren Buffett and Charlie Munger, by Bud Labitan):
• An understandable, first-class business
• A sustainable competitive advantage
• An able and trustworthy management
• A bargain price
Buffett found all of those in ExxonMobil, at a price only slightly above our maximum buy price. I'm not saying I'm as good as Warren Buffett, but we seem to have gotten this one right.
If you know the four filters, you don't need to play guessing games about why Warren Buffett bought ExxonMobil. The only criterion not present in the four filters is Buffett's growing concern over inflation. Buffett likely sees ExxonMobil, like most oil companies, as a hedge against inflation.
Crux Note: You can learn more about ExxonMobil - and Dan's complete list of World Dominators - with a subscription to Extreme Value. Dan has spent a lot of time and energy researching, recommending, and following his World Dominators for one reason: They're great investments. He says they'll vastly outperform 99% of the small-cap garbage you read about. Click
here to learn more...
More from Dan Ferris:
Warren Buffett's wisdom on when to sell
The commercial real estate crash has officially begun
Possibly the dumbest newsletter promotion going right now
