Warren Buffett’s Berkshire Hathaway has been on a buying spree with Occidental Petroleum. The company has bought shares of the oil and gas producer in 10 of the last 13 quarters. Buffett briefly owned Occidental in 2019 and 2020.
But he started buying the stock again in the first quarter of 2022. Since then, he has added to Berkshire’s position in all but three quarters. Berkshire now owns over 264.9 million shares of Occidental.
The stake is worth around $13 billion. This makes Occidental the sixth-largest holding in Berkshire’s portfolio. Why does Buffett like Occidental so much?
Buffett’s notable Occidental Petroleum investments
He has praised CEO Vicki Hollub. Buffett said that Hollub “understands oil” and is advancing innovative extraction methods.
Buffett also likes Occidental’s vast U.S. oil and gas holdings. He has applauded Hollub’s efforts to make Occidental a leader in carbon capture and storage. Berkshire secured approval in 2022 to acquire up to 50% of Occidental.
It currently owns 28.2% of the company. Buffett will likely keep buying more shares, especially since Berkshire owns warrants to purchase Occidental stock at a discount. But is Occidental a good pick for other investors?
The stock trades at a forward price-to-earnings ratio of 12.6. This is well below the energy sector average of 14.75. If Hollub achieves her carbon capture goals, Occidental could deliver significant growth over the long term.
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