Investor Warren Buffett joined the recent oil-buying spree in the market this week by resuming Berkshire Hathaway’s purchases of Occidental Petroleum stock for the first time in four months. Buffett’s company said in a Securities and Exchange Commission filing late Wednesday that it invested more than $246 million to add to its already massive Occidental stake over the first three days of this week.
Berkshire bought nearly 4 million more shares of the Houston-based oil producer to give it more than 228 million shares and control of nearly 26% of Occidental. Buffett has been consistently buying Occidental stock whenever the shares fell below $60 as he built Berkshire’s stake since early last year, but this week he was willing to pay more than $63 for some of these new shares.
These latest Berkshire purchases began on 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 earlier, Exxon Mobil said that it would acquire Pioneer Natural Resources for about $60 billion.
Clearly Buffett, Chevron and Exxon are all betting that oil will remain a significant 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. Not only is Berkshire the biggest shareholder in Occidental, it 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’s required to disclose as a major shareholder, but Buffett typically handles all of Berkshire’s biggest investments worth $1 billion or more. Berkshire’s Occidental stake is now worth more than $14.4 billion.
Last year, Buffett did get permission from federal regulators to buy up to 50% of Occidental, and Berkshire holds warrants to buy another 83.9 million shares for $59.62 apiece, 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 Berkshire owns, it also holds 84,897 preferred shares of Occidental that it picked up in 2019 when it helped finance Occidental’s acquisition of Anadarko. Berkshire used to hold more of those preferred shares, but Occidental has started redeeming them this year at $110,000 apiece to eliminate the hefty dividend the oil producer has to pay on them.
Berkshire’s portfolio includes major stakes in Apple, Bank of America and Coca-Cola stock. But the Omaha, Nebraska-based conglomerate also owns dozens of companies outright including Geico insurance, BNSF railroad, several large utilities and an assortment of manufacturing and retail firms.
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