Warren Buffett’s Berkshire Hathaway has increased its stake in Occidental Petroleum by purchasing 763,017 shares for $35.7 million on Friday. This brings Berkshire’s total stake in the Houston-based energy company to 28.2%. Berkshire also has an agreement to buy an additional 83.9 million shares of Occidental for $59.62 each, or about $5 billion total.
This agreement stems from Berkshire’s role in helping finance Occidental’s acquisition of Anadarko Petroleum in 2019. Despite these continued investments, Buffett has stated he does not intend to take a majority ownership stake in Occidental. As of the end of the third quarter, Occidental was Berkshire’s sixth-largest holding.
On Wednesday, Occidental shares slipped 1.7% to $47.82. The stock has lost approximately 17% over the past year. Buffett, known for his investing acumen, sees long-term value in Occidental despite the recent stock price decline.
Buffett increases Occidental stake further
He believes in the company’s strong cash flow generation, competitive advantages, and growth potential. Occidental is a major player in fossil fuel production, chemicals, and the emerging field of carbon capture technology.
Government incentives and tax credits for carbon reduction add to the company’s appeal in Buffett’s eyes. Since the costly Anadarko acquisition in 2019, Occidental has focused on paying down debt and generating robust cash flow. Buffett values these financial moves and sees fundamental strength in the company, even if the stock faces short-term struggles.
Occidental’s fourth quarter 2024 earnings report is scheduled for next week on the 18th. This will provide insight into the company’s near-term outlook. Wall Street analysts currently consider Occidental a Hold, with a predicted upside potential of 23.25%.
Institutional investors own 88.70% of the company’s stock.
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