Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) has further increased its holdings in Occidental Petroleum (NYSE:OXY), now owning nearly 29% of the oil and gas producer.
Although Buffett has stated that Berkshire does not seek control of Occidental, the conglomerate has consistently bought shares as the stock remains about 12% below its April peak. Last week, Berkshire acquired 7.3 million shares for $176 million over three separate purchases. Following the announcement, Occidental’s stock rose over 1% to trade above $61.
“Mr. Buffett seems to buy more OXY shares whenever the price dips near or below $60, which appears to set a floor on the share price,” said James Shanahan, equity analyst at Edward Jones, to Yahoo Finance.
Shanahan highlighted that Berkshire’s $15.4 billion stake in Occidental makes it the conglomerate’s sixth-largest holding. Apple (NASDAQ:AAPL) remains Berkshire’s top holding, accounting for about 20% of its market cap, even after the company reduced its Apple position in May.
Berkshire maintains significant investments in energy, with Chevron (NYSE:CVX) as a top-five holding, despite recent sales of some of its Chevron shares in March.
“Berkshire’s investment in OXY, including preferred shares, totals nearly $43 billion. This amount has fluctuated between $41 billion and $51 billion since Berkshire began purchasing OXY shares in March 2022,” Shanahan added.
Buffett has been a strong supporter of Occidental Petroleum, often praising CEO Vicki Hollub. He played a key role in financing Occidental’s acquisition of Anadarko Petroleum in 2019.
In December, Occidental announced a $12 billion acquisition of CrownRock, a Midland, Texas-based oil and gas producer, as part of industry consolidation in the Permian Basin. Following this announcement, Berkshire Hathaway bought nearly $600 million worth of OXY shares over three days, signaling confidence in the acquisition.
Occidental recently put some of its assets up for sale to facilitate the purchase of CrownRock. In May, Hollub told Yahoo Finance that the company plans to reduce stock buybacks over the next few years to focus on debt reduction.
“We’ve had a robust repurchase program over the last couple of years because we believe our stock is currently very undervalued,” Hollub said.
Last year, Occidental distributed $600 million in dividends, repurchased $1.8 billion in common shares, and redeemed $1.5 billion in preferred shares.
Despite a 5% decline in 2023, Occidental’s stock surged 119% in the previous year, making it the best-performing stock in the S&P 500 during that period.
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