Warren Buffett Guzzles Up Occidental's Stock
Warren Buffett has taken a roughly 10% stake in Occidental Petroleum's common OXY stock. That makes three different investments in the oil producer.
Warren Buffett has been absolutely hoovering up stock in Occidental Petroleum (OXY, $56.15). In a flurry of recent purchases, Berkshire Hathaway (BRK.B, $325.34) bought 91 million OXY shares, or 9.8% of the integrated oil and gas company's shares outstanding.
The addition to the Berkshire Hathaway equity portfolio coincides with the ongoing melt-up in energy prices, which was sparked by the Russian invasion of Ukraine. Global benchmark Brent crude oil futures briefly topped $130 a barrel in the wee hours of Monday trading, and have gained about 30% over the past month.
The common shares Berkshire just purchased add to its already substantial exposure to the energy firm, which includes $10 billion worth of 8% preferred shares, as well as 84 million warrants to purchase OXY stock. Occidental shares must trade above the warrants' exercise price of $59.62 for the warrants to be in the money.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Buffett received the warrants as an equity "kicker" when he bought the preferred shares in 2019. The funding provided by Buffett helped Occidental win its $55 billion bidding war against Chevron (CVX) to acquire Anadarko Petroleum.
If nothing else, Buffett's buying spree has clearly contributed to OXY stock's dramatic outperformance of late. Berkshire Hathaway purchased more than 60 million OXY shares between March 2 and March 4 – and OXY stock jumped more than 28% over those sessions.
Indeed, on March 4 alone, Berkshire picked up a total of 34 million shares. Occidental closed the session up 17.6%, on abnormally heavy volume. For the year-to-date, OXY stock has gained 94% vs. a 35% increase for the S&P 500 energy sector.
Occidental Petroleum isn't the only recent Buffett move intended to expand BRK.B's exposure to the energy sector. Berkshire Hathaway upped its stake in Chevron by 33% in the fourth quarter of 2021, as well. The holding company held 38.2 million shares in the Dow component as of Dec. 31, a stake which is currently worth $6.1 billion.
Both CVX and OXY get consensus Buy recommendations from Wall Street analysts, but they have significantly greater optimism regarding the former's prospects than the latter's.
Of the 29 analysts issuing opinions on CVX stock tracked by S&P Global Market Intelligence, 13 call it a Strong Buy, seven say Buy and nine rate it at Hold.
As for OXY, the Street's view is decidedly more mixed. Ten analysts call it a Strong Buy, three say Buy, 11 have it at Hold, one calls it a Sell and two say Strong Sell.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
-
Best 529 Plans of 2024
Check out the best 529 plans of 2024 and find the best plan for your child or grandchild’s college savings.
By Erin Bendig Published
-
Harris vs Trump on Medicare Drug Price Negotiations: Fact Check
A fact check of what the Trump and Biden-Harris administrations did around Medicare drug price negotiations.
By Jacob Gardenswartz | KFF Health News Published
-
Stock Market Today: Stocks Retreat Ahead of Nvidia Earnings
Markets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
By Dan Burrows Published
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in Focus
Nvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
By Karee Venema Published
-
Stock Market Today: Dow Hits New Record Closing High
The Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
By Karee Venema Published
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole Speech
Fed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
By Karee Venema Published
-
Stock Market Today: Stocks Drop Ahead of Powell's Jackson Hole Speech
Sentiment turned cautious ahead of Fed Chair Powell's highly anticipated speech Friday at the Jackson Hole Economic Symposium.
By Karee Venema Published
-
Stock Market Today: Stocks Rise After Jobs Data Lifts Rate-Cut Odds
Preliminary data from the Bureau of Labor Statistics shows job growth was lower than previously estimated.
By Karee Venema Published
-
Stock Market Today: Stocks Snap Lengthy Win Streak
The recent stock market rally ran out of steam Tuesday as sentiment turns cautious ahead of Jackson Hole.
By Karee Venema Published
-
Stock Market Today: S&P 500 Extends Longest Win Streak Since November
The Nasdaq also extended its stretch of consecutive gains to eight as Advanced Micro Devices popped on M&A news.
By Karee Venema Published