Occidental Petroleum recently got a vote of confidence from none other than the Oracle of Omaha. As uncertainty hovers over gas prices, the energy company could see a rise in stock prices after news spread about Buffett pumping in nearly $582 million to raise the Warren Buffett Occidental stake to nearly 9.9 million shares.
According to a Friday night filing with the US Securities and Exchange Commission (SEC), Berkshire Hathaway purchased 9.9 million shares of Occidental between June 29 and July 1, for roughly $582 million. This makes Berkshire the largest holder of Occidental shares.
Warren Buffett Occidental Stake – A journey
Warren Buffett Occidental stake sojourn started in February 2022 after he listened to an analyst’s presentation on the company. He soon started buying up Occidental stock warrants and shares as he was impressed by CEO Vicki Hollub’s future plans. At Berkshire’s annual shareholder meeting in May, he justified his decision to start buying Occidental Petroleum shares saying, “What Vicki Hollub was saying made nothing but sense. And I decided that it was a good place to put Berkshire’s money.” In the last quarter, Occidental generated $8.01 billion of revenue, 139% annual jump. The company’s financials and revenue growth pushed the investor to up the stakes.
Berkshire did not halt its plans with an initial purchase in February. It continued to buy up stock and in around two weeks Warren Buffett Occidental stake had risen to almost 14%. Thereafter, as global gas prices rose, so did the share price of Occidental. Occidental’s shares have vastly benefited from the economic instability arising due to Russia’s invasion of Ukraine. It looked like the Oracle of Omaha had once again made the right moves. By mid-June, Occidental’s share price had risen by more than 90% in comparison to other S&P 500 stocks that had fallen nearly 20%.
The billionaire investor then bought another set of shares between June 29 and July 1. With the latest acquisition, wherein he purchased 9.9 million shares, his total stake in Occidental made him the biggest shareholder. As of today, Berkshire owns nearly 163.4 million shares worth about $9.9 billion giving them almost 17% stake in the company. According to Refinitiv data, the second largest Occidental shareholder is mutual fund giant Vanguard with an 11% stake. In addition to this, Berkshire might continue to up their stake as it also owns Occidental stock warrants to buy another 83.9 million shares for $5 billion. Berkshire’s spending spree has prompted speculation that the investment firm will eventually buy out Occidental, something Buffett is well-known for.
Berkshire’s buying Spree
The company wholly owns GEICO, Duracell, Dairy Queen, BNSF Railway, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long & Foster, FlightSafety International, Shaw Industries, Pampered Chef, Forest River, and NetJets, and also owns 38.6% of Pilot Flying J. The top five holdings of Berkshire comprise of Apple Inc. (AAPL), American Express Company (AXP), Bank of America Corp (BAC), Chevron, and The Coca-Cola Company (KO), with Apple making up nearly 41% of its stocks portfolio.
Berkshire also has considerable investments in other energy stocks, including Chevron. At the end of March, the firm’s stake in the oil company stood at nearly $26 billion. In the shareholder meeting in May, Berkshire revealed that Chevron is one of its core holdings. The company’s energy portfolio is quite diverse, with investments in oil and natural gas pipeline companies as well as in renewable power companies. Its portfolio consists of more than 10 companies with holdings across the US, the UK, and Canada. Greg Abel who serves as president, chairman, and CEO of Berkshire Energy and was selected to succeed Warren Buffett as CEO last year.
