Berkshire Hathaway continued to add to its large stake in
Occidental Petroleum in recent days and now holds a $7.2 billion interest in the big energy company, according to a filing late Wednesday.
Berkshire Hathaway (ticker: BRK/A, BRK/B) purchased 18.1 million shares from Monday through Wednesday to bring its stake to 136.4 million shares, a 14.6% interest in Occidental Petroleum (OXY).
Berkshire, led by CEO Warren Buffett, has been on an uncharacteristically aggressive buying spree involving Occidental. Berkshire has bought more than 100 million shares since March 2. The buying has spurred speculation that Buffett may ultimately want to purchase the entire company.
Buffett, who oversees Berkshire’s $350 billion equity portfolio, normally accumulates stakes in companies quietly over time.
It’s unusual for Buffett to be so aggressive and public about his purchases. As a holder of more than 10% of Occidental, Berkshire must report any changes in its stake publicly within two business days through a Form 4 filing with the Securities and Exchange Commission. Berkshire paid in a range of about $53 to $55 a share for the latest batch of Occidental stock, which ended Wednesday at $52.99, down 2.8% on the day.
Berkshire shares hit a record Wednesday with the Class A stock ending at $504,036, up 1.2%, in the first close above the $500,000 mark. The stock stood at around $20 when Buffett took control of the company in 1965. Berkshire’s Class B shares ended at $336.11, up 1.1%.
Buffett knows Occidental well. Berkshire bought $10 billion of Occidental preferred stock paying a lush 8% dividend in 2019 when Occidental CEO Vicki Holub was seeking quick financing during a bidding war with
Chevron for Anadarko Petroleum. Occidental won due in part to the Berkshire financing.
Berkshire got 83.9 million warrants to buy Occidental stock as part of that deal. They have an exercise price of $59.62 a share.
Occidental produces about 1.2 million barrels of oil equivalent daily and has been an industry leader in carbon capture. The company was burdened by high debt from its 2019 purchase of Anadarko Petroleum, but it has been rapidly paying that down thanks to the rally in energy prices. Occidental CEO Holub said in February that the company aims to get its net debt down to under $25 billion by the end of the first quarter. The shares are up from a low of under $10 in 2020.
Buffett doesn’t tend to like pricey stocks. Occidental trades for around 11 times projected 2022 earnings, but the company’s profits are highly sensitive to energy prices. He also has no qualms about owning energy companies, unlike some socially conscious investors.
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