Berkshire Hathaway: International Oil Companies (IOCs)

Warren Buffett's Berkshire Hathaway (BRK) has periodically owned shares of International Oil Companies(IOCs). He made a 2% purchase in 1979 of Hess, followed by the profitable sale of those shares in 1980. He then made a sizeable 15% purchase in 1984 of Exxon, followed by the profitable sale of those shares in 1985. Then, more than twenty years later, he made a 2% purchase of Conoco in 2006. He then pushed this purchase up to over 20% of the equity portfolio in 2008, admitting he made a "major mistake." Since that time, he has sold about one-third of the shares at a loss.

Was there a common thread of reasoning in these purchases? Based on reviewing the annual reports written for the years of purchase, I would conclude that inflation was a significant factor. 1979 and 1984's BRK annual reports have extensive discussions about the impact of inflation. However, the annual reports of 2006 and 2008 do not discuss inflation. Of course, 2008 is not under consideration as the environment turned into a deflationary rout. However, 2006's annual report has an extensive discussion of a weakening currency based on a widening trade deficit - a typically inflationary factor.