Omaha, Neb. (AP) – Investor Warren Buffett joined the market’s recent oil-buying spree this week by resuming purchases of Berkshire Hathaway’s Occidental Petroleum stock for the first time in four months.Thank you for reading this post, don't forget to subscribe!
Buffett’s company said in a filing with the Securities and Exchange Commission late Wednesday that it had invested more than $246 million in the first three days of this week to add to its already large Occidental stake.
Berkshire bought about 4 million more shares of the Houston-based oil producer, giving it more than 228 million shares and control of about 26% of Occidental. Buffett has consistently bought Occidental stock whenever shares fell below $60 since he built up his Berkshire stake since early last year, but this week he was willing to pay more than $63 for some of these new shares .
Berkshire’s latest purchases come the same day Chevron announced it was buying Hess Corp for $53 billion in the second megadeal in the oil sector this month. Less than two weeks ago, Exxon Mobil said it would acquire Pioneer Natural Resources for about $60 billion.
Apparently Buffett, Chevron and Exxon are all betting that oil will remain an important source of the nation’s fuel sources well into the future, even as the United States works to transition more to renewable energy sources.
And Buffett knows the oil sector well. Berkshire is not only the largest shareholder in Occidental, but also owns more than 123.1 million Chevron shares in its $350 billion portfolio.
Many investors like to follow Buffett’s moves in the market because of his remarkably successful track record over the years. He doesn’t comment on stock purchases like this beyond what he is required to disclose as a major shareholder, but Buffett typically handles all of Berkshire’s largest investments worth $1 billion or more. Berkshire’s Occidental stake is now worth more than $14.4 billion.
Last year, Buffett got permission from federal regulators to buy up to 50% of Occidental, and Berkshire has warrants to buy 83.9 million shares at $59.62 a share, so more purchases seem likely. But Buffett has said he has no plans to buy the entire company.
In addition to the common Occidental shares owned by Berkshire, he also owns 84,897 preferred shares of Occidental, which he picked up in 2019 when he helped Occidental acquire Anadarko. Berkshire used to hold more of those preferred shares, but Occidental has begun cashing them out this year at $110,000 a share to eliminate the hefty dividends the oil producer pays on them.
Berkshire’s portfolio includes major stakes in Apple, Bank of America and Coca-Cola stocks. But the Omaha, Nebraska-based conglomerate also owns dozens of companies, including Geico Insurance, BNSF Railroad, several large utilities and manufacturing and retail firms.