Introducing National Oilwell Varco, a “Warren Buffett stock”



National Oilwell Varco

National Oilwell Varco Inc. (NOV) is a U.S. company that provides oilfield services and equipment and parts used in oil and gas (O&G) drilling and production. So the company’s fortunes are tied to O&G prices, which affect exploration and production companies’ inclination to drill for oil and gas.

NOV’s closest peers and competitors include companies like Schlumberger (SLB), Halliburton (HAL), and Baker Hughes (BHI).

NOV - P1

Operational overview

Until recently, NOV operated through three segments:

  1. Rig Technology
  2. Petroleum Services & Supplies
  3. Distribution & Transmission

However, in May this year, the company spun off its distribution business into a separately traded company, DistributionNOW (DNOW).

Following the separation, NOV reorganized its operations into four segments (described in the image above):

  1. Rig Systems
  2. Rig Aftermarket
  3. Wellbore Technologies
  4. Completion & Production Solutions

A “Buffett stock”

As of 2Q14, Warren Buffett’s Berkshire Hathaway (BRK.B) held ~7.5 million shares or ~1.7% of NOV’s shares in its portfolio. While NOV isn’t among BRK’s top holdings—and BRK isn’t among the top holders of NOV stock—NOV’s inclusion in BRK’s portfolio says a lot about the company.

This series studies National Oilwell Varco’s financial performance over the last seven years to help you understand why the company has earned the privilege of becoming a Buffett stock.

Key ETFs

ETFs are a great way to gain low-cost, diversified exposure to various sectors—and even broad markets.

NOV is part of the O&G equipment and services sector, which you can track via the VanEck Vectors Oil Services ETF (OIH). OIH counts SLB, HAL, NOV, and BHI among its top five holdings.

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