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Berkshire Hathaway buys $105.5 million in Occidental Petroleum stock

Published 06/12/2024, 08:43 PM

In a recent series of transactions, Berkshire Hathaway Inc . (NYSE:BRKa) has made significant purchases of Occidental Petroleum Corp (NYSE:NYSE:OXY) stock, totaling approximately $105.5 million. The acquisitions, which took place over a span of three days, have further increased Berkshire Hathaway's substantial stake in the energy company.

The transactions began on June 10, 2024, with Berkshire Hathaway acquiring 584,550 shares at a weighted average price of $60.2562. This was followed by a purchase of 399,859 shares on June 11 at an average price of $60.4253, and a final buy of 765,899 shares on June 12. The prices for these transactions ranged from $59.7400 to $60.6100 per share.

These purchases are part of Berkshire Hathaway's ongoing investment strategy in Occidental Petroleum, which has been a significant holding within their diverse portfolio. The energy sector, particularly oil and gas, has been an area of interest for Berkshire, and these recent acquisitions underscore their commitment to this investment.

Following these transactions, Berkshire Hathaway's ownership in Occidental Petroleum has increased to an impressive 252,333,913 shares. The company, led by the renowned investor Warren E. Buffett, has a history of making large-scale investments in companies they believe have long-term value.

Investors and market analysts often keep a close eye on Berkshire Hathaway's investment moves, considering them to be indicators of strategic positioning within various industries. The recent accumulation of Occidental Petroleum shares is likely to be interpreted as a strong vote of confidence in the company's future prospects.

Berkshire Hathaway's investment in Occidental Petroleum is managed through its subsidiary, National Indemnity Company. Warren E. Buffett, as the controlling shareholder, has indirect ownership of these shares, emphasizing his influence over Berkshire's investment decisions.

The energy sector has been subject to volatility, and Berkshire Hathaway's increased stake in Occidental Petroleum could be seen as a move to capitalize on potential growth as market conditions evolve. With this latest round of investments, Berkshire Hathaway continues to solidify its position as a major shareholder in one of the leading companies in the crude petroleum and natural gas industry.

In other recent news, Occidental Petroleum has been the subject of several noteworthy developments. The company exceeded Q1 expectations with record production and significant cost reductions, aiming to improve cash flow by over $1 billion and strengthen its balance sheet. Occidental also plans to divest approximately $5 billion in assets, a move that has drawn attention from analysts at Roth/MKM and Truist Securities.

Roth/MKM maintained a neutral rating on Occidental, citing factors like higher debt compared to competitors and investments in carbon capture projects that may not yield short-term profits. Truist Securities, on the other hand, downgraded the company's stock from Buy to Hold due to less anticipated benefits from its CrownRock acquisition compared to other recent industry deals.

Another significant development is Berkshire Hathaway's acquisition of approximately 2.57 million shares of Occidental, further solidifying its position. This move has been viewed as a vote of confidence in Occidental. The company was also mentioned during former President Donald Trump's fundraising tour in Texas, where he garnered significant support from the energy sector. These are all recent developments that investors should keep an eye on.

InvestingPro Insights

Berkshire Hathaway's latest investment in Occidental Petroleum (NYSE:OXY) not only increases its shareholding but also aligns with the company's commendable track record of dividend consistency and stability. An InvestingPro Tip highlights that Occidental Petroleum has maintained dividend payments for an impressive 51 consecutive years, a testament to its financial resilience and commitment to shareholder returns. Additionally, analysts predict the company will remain profitable this year, which may have been a contributing factor in Berkshire Hathaway's decision to bolster their investment.

Looking at the InvestingPro Data, Occidental Petroleum's market capitalization stands at a robust $53.46 billion, with a Price to Earnings (P/E) ratio of 15.29, indicating a potentially attractive valuation relative to its earnings. The company's revenue for the last twelve months as of Q1 2024 was reported at $27.01 billion, despite a revenue growth decline of -23.95%. The Gross Profit Margin during the same period was a strong 59.58%, showcasing the company's ability to maintain profitability.

For investors seeking a deeper analysis of Occidental Petroleum's financial health and investment potential, InvestingPro offers additional tips. There are currently 4 more InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/OXY. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 to receive an additional 10% off.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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