This past Thursday, Berkshire Hathaway BRK.B +0.04 percent purchased an additional 794,000 shares of Occidental Petroleum OXY +2.40 percent, bringing its total position in the large American oil business to 16.4 percent.
On June 17 and June 22, Warren Buffett’s Berkshire Hathaway (BRK/A, BRK/B) acquired a total of 9.5 million shares. A $9 billion investment in Occidental Petroleum (OXY) has been added to Berkshire Hathaway’s holdings in the company.
When compared to prior months, the amount Berkshire spent for the majority of the freshly bought shares was a rather modest sum. On Monday, Occidental Petroleum’s (OXY) shares rose 2.4 percent to $58.90, following a recent surge in oil prices.
Occidental stock in the 1950s seems to be a favorite of Buffett’s. According to Barron’s calculations, Berkshire paid an average price of $53 per share for almost 80% of its stock since March. There is a $1 billion dollar profit on paper based on our assessment of the average cost per share for the total holding. The Berkshire Hathaway interest was originally made public in early March.
At its peak in late May, Occidental’s shares traded at $74.
For Berkshire to trade in Occidental, it must notify the Securities and Exchange Commission within two business days following the transaction.
Berkshire’s recent acquisitions might feed speculation that the business could increase its investment to at least 20% or perhaps make a takeover attempt for the whole company itself.s. Berkshire, with a 20 percent stake in Occidental, is expected to get a separate accounting approach, allowing it to report its part of Occidental’s profits in its own financial statements.
According to Occidental’s results conference call in May, it expects to commence a $3 billion share buyback program in the current quarter. Berkshire’s ownership of the firm will increase if the scheme is carried out. Occidental has been working hard to pay off the debt it took on when it bought Anadarko Petroleum in 2019. Net debt was $23 billion at the end of the first quarter, dropping gradually in prior quarters owing to high earnings.
Occidental is one of the S&P 500’s best-performing companies this year, making it easy to understand why Berkshire is still interested in the company. Even with the stock’s recent surge, Occidental trades at a five-times multiple of its estimated profits for 2022. Occidental, a major oil producer based in the United States, is another favorite of Warren Buffett’s.
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