US Markets
Tuesday, June 18th, 2024 3:07 pm EDT
Key Points
- Berkshire Hathaway has increased its stake in Occidental Petroleum to 28.8%, purchasing an additional 7.3 million shares over the past nine trading sessions, making it Occidental’s largest institutional investor.
- Berkshire owns $10 billion in Occidental preferred stock and warrants to buy 83.9 million more shares, potentially increasing its ownership above 40% if fully redeemed, but Buffett has stated he will not take full control of the company.
- Buffett’s investment in Occidental was influenced by his positive impression of the company’s management and strategy after reading their earnings call transcript, and he took advantage of market volatility in early 2022 to rapidly acquire a significant stake.
Warren Buffett’s Berkshire Hathaway has significantly increased its holdings in Occidental Petroleum over the past nine trading sessions, according to regulatory filings. The Omaha-based conglomerate has acquired an additional 7.3 million shares, with purchase prices hovering around $60 per share, during this period. These transactions, completed between June 5 and a recent Monday, have elevated Berkshire’s stake in the Houston-based oil and gas producer to 28.8%, totaling over 255 million shares. This investment makes Occidental Berkshire’s sixth-largest stock holding, solidifying its position as the largest institutional investor in the company.
In addition to common shares, Berkshire owns $10 billion in Occidental preferred stock and holds warrants to purchase an additional 83.9 million common shares for $5 billion, or $59.62 each. These warrants, which were part of a 2019 deal to finance Occidental’s acquisition of Anadarko Petroleum, are now “in the money,” as Occidental’s stock recently closed at $60.2. Should Berkshire fully redeem its preferred equity, its ownership in Occidental could exceed 40%.
Despite these substantial investments, Buffett has stated he does not intend to take full control of Occidental. This clarification comes amid speculation following regulatory approval allowing Berkshire to purchase up to a 50% stake in the company. Buffett’s interest in Occidental began after he was impressed by the company’s earnings conference call, leading him to start buying shares. He praised Occidental’s CEO, Vicki Hollub, for her effective management of the company.
Occidental pays a 1.5% dividend yield and its stock has remained relatively stable this year after a 5% decline in 2023. Buffett capitalized on market volatility in early 2022 to rapidly acquire a 14% stake in Occidental, worth over $7 billion, in just two weeks. He marveled at the ease of acquiring such a significant portion of a large public company compared to other types of assets, such as farms, apartment buildings, or auto dealerships, which would be much more challenging to amass on a similar scale.
Buffett’s strategic and sizeable investment in Occidental underscores his confidence in the company’s management and future prospects, as well as his ability to make bold moves in volatile markets.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/18/warren-buffett-buys-occidental-shares-for-9-straight-days-pushes-his-stake-to-nearly-29percent.html
