Warren Buffett’s Berkshire Hathaway just ramped up its bet on Occidental Petroleum again. Buffett’s company paid about $126 million for 2.2 million shares, raising its stake to nearly 24%. The investor has ruled out buying the whole company, joking he wouldn’t know what to do with it. Loading Something is loading.
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Warren Buffett may have soured on banks and dumped over $10 billion worth of stocks last quarter, but his fondness for Occidental Petroleum shows no sign of fading.
The famed investor’s Berkshire Hathaway spent roughly $126 million to buy 2.2 million shares in the oil-and-gas giant over the past three trading days, a Securities and Exchange Commission filing revealed on Monday.
The purchases boosted Berkshire’s stake to nearly 214 million shares, or 23.8% of the company. Buffett and his team have now plowed well over $11 billion into Occidental since February last year, a Markets Insider analysis shows.
Occidental’s stock price surged 117% in 2022, making it the S&P 500’s top performer for the year. It benefited from Buffett’s backing, and Russia’s invasion of Ukraine disrupting global energy supply and causing oil prices to spike.
However, Occidental shares have slumped by 24% from their August peak to trade at $58.52 as of Monday’s close. Buffett – a value investor who specializes in sniffing out bargains – likely determined they were priced too cheaply, and decided to pounce for the first time since late March.
Berkshire’s stake is currently worth around $12.5 billion, excluding preferred stock and warrants it received in exchange for financing Occidental’s takeover of Anadarko Petroleum in 2019. Berkshire’s preferred shares pay an 8% dividend, meaning Buffett and team have been collecting $800 million annually from the $10 billion holding in recent years.
However, Monday’s filing shows that Occidental paid Berkshire $711 million between April 11 and May 12 to redeem 6,468 of the conglomerate’s preferred shares. Berkshire’s stockpile shrunk from 100,000 shares to 93,532 as a result.
“In the last few months, they’ve reduced our preferred, which we don’t like obviously,” Buffett said during Berkshire’s annual shareholder meeting this month. “We’d be disappointed in them if they didn’t reduce it, it’s intelligent from their standpoint.”
Buffett and his team secured the green light from regulators in August to increase their Occidental ownership to 50%. But the Berkshire chief ruled out a takeover during the Berkshire meeting.
“We’re not going to buy control,” Buffett said. “We wouldn’t know what to do with it,” he continued, joking that his knowledge of drilling for oil doesn’t extend beyond digging in his garden.
Buffett, who describes himself as a “business picker” instead of a stock picker, also hailed Occidental CEO Vicki Hollub as an “extraordinary manager.”
“We love the position with Occidental, and we love having Vicki run it,” he said.
For more of Insider’s coverage of Berkshire’s annual shareholder meeting, click here.
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