Berkshire Hathaway, led by Warren Buffett, has made substantial investments in Occidental Petroleum, acquiring a stake of over 20% in the company. Buffett’s journey with Occidental stock began in 2019.
Since that time, he has consistently raised his ownership. By August 2022, Berkshire earned regulatory consent to enhance its ownership up to 50% of Occidental’s common shares. Analysts suggest that Buffett recognizes numerous promising aspects of Occidental.
To start, the firm possesses significant assets, notably its chemical sector and shale oil fields within the Permian Basin. Additionally, Occidental is dedicated to reducing its debt and increasing dividends. “We find immense value in Oxy’s exceptional asset portfolio, alongside its ongoing commitment to debt reduction and enhancing shareholder returns,” remarked Neal Dingmann, an analyst at Truist Securities.
Buffett’s Growing Stake in Occidental
Another element influencing Buffett’s investment may be his positive perspective on oil prices. The earnings of Occidental are closely linked to fluctuations in crude oil prices.
Should oil prices escalate, the company stands to gain considerably. Nonetheless, some analysts have raised concerns about the wisdom of investing in Occidental at this time, given that its stock has surged dramatically since Buffett’s initial purchase.
Its current valuation might be perceived as stretched when compared to its industry counterparts. “Occidental is currently valued higher than other companies in the oil and gas sector,” observed Paul Sankey, an analyst at Sankey Research. “Investors should exercise caution when considering buying the stock at these price levels.”
Ultimately, only time will reveal whether Buffett’s substantial wager on Occidental will yield fruitful results.
Numerous observers on Wall Street are keenly monitoring the moves of the iconic investor. His significant investment has undoubtedly drawn attention to the oil and gas enterprise.
