In August 2020, Exxon Mobil Inc., the largest American oil company, was expelled from the Dow Jones Industrial Average, the world’s most famous stock index. It was described at the time as green triumphing over greed. Nearly three years later, the mood has changed. ESG isn’t the coolest financial trend; neither is divesting from oil companies. Regardless of whether the expulsion was right or wrong, the time has come to reverse it.
Q1 2023 hedge fund letters, conferences and more
Sending Exxon to the naughty corner hasn’t hurt it. Since its exclusion, breaking a 92-year-long membership, it has outperformed the index, delivering total returns including reinvested dividends of 212% compared with 25% for the index. Its market value has also surged to $438 billion, from $168 billion the day it was kicked out. Salesforce Inc, the software company that replaced Exxon in the Dow, is currently worth $200 billion.
Exxon isn’t alone. Of the top 15 American companies by market value, eight aren’t part of the index, including Google parent Alphabet Inc., Warren Buffett’s Berkshire Hathaway Inc., and Tesla Inc., the business controlled by the world’s richest man, Elon Musk.
Read the full article here by Javier Blas, Advisor Perspectives.
