Berkshire Hathaway, led by billionaire investor Warren Buffett, has increased its holdings in Occidental Petroleum, capitalizing on a significant downturn in the oil and gas producer's stock. This strategic move comes after Occidental's shares plummeted more than 30% from their record high last April. Berkshire's recent acquisition of 763,017 shares, valued at $35.7 million, was disclosed in a regulatory filing and underscores its status as Occidental's largest shareholder, with a 28.2% stake.
Occidental Petroleum remains a significant part of Berkshire Hathaway's portfolio, ranking as its sixth-largest equity holding. The investment firm already owns $10 billion in Occidental preferred stock and possesses warrants to purchase an additional 83.9 million common shares for $5 billion, exercisable at $59.62 per share. This latest purchase occurred during a broad market pullback in late December, when Berkshire bought 8.9 million shares.
The share price decline of over 17% in 2024 can be attributed to weakening oil prices. Despite this, Occidental offers a 1.8% dividend yield and has been actively investing in a carbon capture business, which could provide long-term growth opportunities. Speculation about a potential takeover has surfaced after Berkshire received regulatory approval to acquire up to a 50% stake in the company.
Warren Buffett's interest in Occidental began after he read a transcript of the company's earnings conference call. Since then, Berkshire Hathaway has continued to bolster its position, even as Occidental's shares have fallen nearly 32% from their peak. This latest purchase reflects Berkshire's confidence in Occidental's future prospects and its commitment to expanding its energy sector investments.