Warren Buffett has been buying more shares of Occidental Petroleum over the past nine trading days. This has pushed his stake in the Houston-based oil and gas company to nearly 29%. Berkshire Hathaway, Buffett’s company based in Omaha, Nebraska, bought Occidental shares every day from June 5 to Monday.
They bought an extra 7.3 million shares at prices just under or above $60. The purchases increased Berkshire’s holding to over 255 million shares. This is a 28.8% stake in Occidental.
The oil company is now Berkshire’s sixth-biggest stock holding. Berkshire has also become Occidental’s largest institutional investor. Besides common stock, Berkshire owns $10 billion of Occidental preferred stock.
They also have warrants to buy another 83.9 million common shares for $5 billion, or $59.62 each. Occidental’s stock closed at $60.2 on Monday. This means Buffett’s warrants are “in the money.” If Berkshire fully redeems the preferred equity, their ownership of Occidental could go above 40%.
Buffett’s growing Occidental stake
However, Buffett has said he would not take complete control of the oil company. There had been talk of a possible takeover after Buffett showed interest in buying up to a 50% stake.
Buffett, known as the “Oracle of Omaha,” began buying Occidental after reading a transcript of the company’s earnings call. “I read every word, and said this is exactly what I would be doing,” Buffett said. He added that Occidental’s management is “running the company the right way.”
Occidental also pays a 1.5% dividend.
The stock is about flat this year after falling 5% in 2023. The famous investor said he took advantage of high market volatility in early 2022. He acquired 14% of the energy firm, worth over $7 billion, in just two weeks.
“I find it just incredible. You couldn’t do that with Berkshire. Overwhelmingly, large companies in America became poker chips,” Buffett noted.
He stressed how hard it would be to buy big shares in other large sectors. “Imagine trying to [buy] 14% of the farms in this country; 14% of the apartment houses; 14% of the auto dealerships, or just anything, when already 40% were locked up some other place.”
Buffett’s strategic investment shows his skill in the market and his belief in the potential of the energy sector.
