Thursday, July 8, 2010

ConocoPhillips (NYSE:COP) Confirms Warren Buffett's Wisdom Again

A lot of people commenting on Warren Buffett's investment in ConocoPhillips (NYSE:COP) thought he had made a bad decision, and as usual didn't see the value in Conoco that Buffett did.

He again has proven himself one of the best analyzers of companies, as he invested heavily in Conoco, and has been rewarded strongly for it, and will be for some time to come if the oil giant continues to perform as it has been.

Considering the pressure on the overall equities market, and even more on the oil sector, the performance of Conoco has been solid no matter how you measure it.

Their 52-week range has been from $38.62 to $60.53, and today are standing at $51.16.

4 comments:

  1. I don't get this at all. Didn't Buffett pay around 80 bucks a share for his COP investment? It's a good, shareholder-friendly company, but in this case the Sage of Omaha went totally wrong with his timing.

    ReplyDelete
  2. He invested in it at $80 having pegged a value on it at around $125 to $150 (my conservative DCF valuation). The fact that it tanked after buying was a bad call on the market conditions, not on the value of the company.

    He subsequently started selling it at a loss to write off tax and reallocate the capital to more promising opportunities.
    He's a genius, but he's also allowed to makes mistakes.

    ReplyDelete
  3. In other words, "he invested heavily in Conoco, and has been rewarded strongly for it" -- with tax-deductible losses.

    Yes, Buffett is a genius, but even he doesn't bat 1.000.

    ReplyDelete
  4. At one place in the book The Snowball , Only Warren Buffet could have the guts to tell his biographer – wherever my version and someone else’s version differ, use that one which is less flattering. If this is not transparency, what is?

    ReplyDelete