Buffett’s company likely to add to its stake in Occidental

OMAHA, Neb. — Warren Buffett’s company has been cleared to increase its 20% stake in Occidental Petroleum to a whopping 50%, but it’s not immediately clear how many shares Berkshire Hathaway plans to buy or whether it will consider buying the entire company. .

Shares of the oil producer rose nearly 12% on Friday after the Federal Energy Regulatory Commission revealed it approved Berkshire’s request to buy up to 50% of the Houston-based company.

Shares fell 3% to about $69 during a broader sell-off on Monday as speculation cooled off about Berkshire’s potential to buy the entire company.

Berkshire typically does not comment on its equity investments beyond what it is required to disclose, and Buffett did not respond to questions about Occidental Monday. But Buffett told shareholders at the company’s April annual meeting that he started buying Occidental stock in late February because what the CEO told investors at the time made “nothing but logical” sense to him.

Berkshire’s purchases of Occidental and a $20 billion investment in Chevron stocks early this year allowed Buffett to take advantage of the surge in oil prices after Russia invaded Ukraine.

Edward Jones analyst Jim Shanahan said he thinks it’s likely that Berkshire Occidental shares will continue to buy if the price dips back below $60. Shares are up 13% in the past 30 days and 130% this year. But he doesn’t think it’s likely Berkshire will try to take over the entire company unless Occidental’s stock drops significantly.

CFRA Research analyst Cathy Seifert said she also expects Berkshire to continue to buy, but noted that Berkshire has pledged to use $11.6 billion of its roughly $105 billion in cash later this year to fund the Alleghany insurance conglomerate. to buy.

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In addition to Berkshire’s massive stake in Occidental common stock, it also owns $10 billion in preferred stock and warrants to purchase an additional 83.9 million Occidental shares for $59.62 each. It picked up both in 2019 when it helped fund Occidental’s purchase of Anadarko.

In addition to investments, Omaha, Nebraska-based Berkshire owns more than 90 companies, including Geico Insurance, several major utilities, BNSF Rail and an assortment of manufacturing and retail companies including See’s Candy, Dairy Queen and Precision Castparts.

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