Warren Buffett’s Berkshire Hathaway has been making strategic moves in the energy sector by steadily increasing its stake in Occidental Petroleum over the past nine trading sessions. With each trading day from June 5 to Monday, Berkshire Hathaway acquired an additional 7.3 million shares of Occidental Petroleum, bringing its total holding to over 255 million shares, representing a massive 28.8% stake in the Houston-based oil and gas producer.
Buffett’s acquisitions of Occidental shares come as part of a larger deal that Berkshire struck in 2019 to help finance Occidental’s purchase of Anadarko Petroleum. Berkshire also holds $10 billion of Occidental preferred stock and has warrants to acquire another 83.9 million common shares for $5 billion. The recent purchases have put Buffett’s warrants “in the money,” potentially leading to a full redemption of the preferred equity that could further boost Berkshire’s ownership of Occidental above 40%.
Despite the increased stake and potential for greater ownership in Occidental Petroleum, Buffett has made it clear that he does not intend to take full control of the oil company. Instead, he has expressed his confidence in Occidental CEO Vicki Hollub’s leadership and the way she is running the company. Buffett’s commitment to the company is also evident in the fact that Occidental is now Berkshire’s sixth-largest stock holding, with Berkshire emerging as Occidental’s largest institutional investor.
Buffett’s decision to invest in Occidental was based on thorough research and analysis. He mentioned that he started buying Occidental shares after carefully reading a transcript of the company’s earnings conference call. Impressed by the company’s direction and performance, Buffett saw an opportunity to make a significant investment in the energy firm, capitalizing on the market’s volatility in early 2022.
Occidental Petroleum’s stock performance has been steady, with a 1.5% dividend yield and relatively flat performance this year, following a 5% dip in 2023. Buffett’s continued interest in the company and his long-term investment strategy suggest that he sees potential for growth and value in Occidental Petroleum. With his strategic moves and confidence in Occidental’s leadership, Buffett’s investment in the company is set to make a lasting impact on Berkshire Hathaway’s portfolio.