Investor Warren Buffett has now joined the recent oil-buying spree with his Berkshire Hathaway resuming its purchases of Occidental Petroleum stock after a four-month hiatus. According to Associated Press, the company in a Securities and Exchange Commission filing revealed that it has invested over $246 million this week to add to its already significant stake in Occidental. With this latest purchase, Berkshire now controls nearly 26% of the Houston-based oil producer, owning more than 228 million shares.
Buffett has been consistently buying Occidental stock since last year whenever its price fell below $60.However, this week, he was willing to pay over $63 per share for some of the new shares, the report said.
These Berkshire purchases coincided with Chevron’s announcement of its $53 billion acquisition of Hess Corp. The Chevron deal was the second major one in the oil sector this month after Exxon Mobil’s $60 billion deal to acquire Pioneer Natural Resources. It is evident that Buffett, Chevron, and Exxon are all confident in the future of the oil sector, even as the United States aims to transition to renewable energy sources.
Berkshire Hathaway not only holds a substantial stake in Occidental but also owns more than 123.1 million shares of Chevron, so the oil sector is well known to Buffett. Investors often follow Buffett’s investment moves due to his successful track record. While Buffett does not provide extensive comments on his stock purchases, he handles Berkshire’s significant investments personally. The value of Berkshire’s Occidental stake now exceeds $14.4 billion.
Buffett received regulatory approval last year to buy up to 50% of Occidental, and Berkshire holds warrants to purchase an additional 83.9 million shares. Although more purchases may occur, Buffett has stated that he has no intention of acquiring the entire company. In addition to the common Occidental shares, Berkshire also owns 84,897 preferred shares obtained in 2019 when it helped finance Occidental’s acquisition of Anadarko.
Berkshire previously had a larger holding of these preferred shares, but Occidental has initiated their redemption this year at a price of $110,000 each. This move aims to eliminate the substantial dividends that the oil producer is obligated to pay on these shares.
Berkshire Hathaway’s diverse portfolio includes major holdings in Apple, Bank of America, and Coca-Cola. Furthermore, the conglomerate owns various companies outright, such as Geico insurance, BNSF railroad, utilities, and manufacturing and retail firms.