OMAHA, Neb. — Warren Buffett’s company bought more than $11 billion worth of Occidental Petroleum stock this year, giving Berkshire Hathaway control of more than 20% of the oil producer.
Occidental shares rose more than 3.5% on Tuesday to $62.18 after Buffett revealed his latest purchases of nearly 6.7 million shares of Occidental worth more than $400 million. .
Wall Street is watching Buffett’s actions closely, including his investments in Occidental Petroleum. Its shares have more than doubled in price this year.
Berkshire has repeatedly acquired shares of the Houston driller whenever the stock has fallen below $60 in recent months. Buffett also lost more than $20 billion on Chevron shares in the first quarter of this year and benefited from the oil price spike after Russia invaded Ukraine. Berkshire’s stake in Chevron is worth more than $24 billion.
That means Buffett’s Omaha, Nebraska conglomerate has nearly $47 billion in oil sector investments, as Berkshire owns an additional $10 billion in preferred shares of Occidental that it acquired. in 2019 when he helped fund Occidental’s purchase of Anadarko.
And Buffett can’t be done. Berkshire holds warrants to buy an additional 83.9 million shares of Occidental at $59.62 apiece. Edward Jones analyst Jim Shanahan estimates that Berkshire’s oil sector holdings are worth $46.6 billion today, even without the value of those warrants.
Since Berkshire now owns 20.2% of Occidental’s shares, it will be allowed to record a proportionate share of the oil producer’s profits in its earnings reports. That could boost Berkshire’s bottom line by about $2 billion a year.
Buffett has invested aggressively in stocks this year as the market was weighed down by soaring inflation and rising interest rates. Berkshire spent more than $51 billion on stocks in the first quarter, but the pace of its investments slowed significantly in the second quarter, when it was a net buyer of just $3.8 billion in stocks, much of which was intended for Occidental. Berkshire will detail all of its second-quarter stock purchases later this month.
In addition to the stakes it holds in companies, Berkshire owns more than 90 businesses, including BNSF Railroad, Geico Insurance, several major utilities, and an eclectic assortment of manufacturing and retail businesses like See’s Candy, Dairy Queen, Helzberg Diamonds, Fruit of the Loom and Precision Castings. Most of those companies have performed well this year, but Berkshire posted a $44 billion quarterly loss over the weekend due to a sharp decline in the paper value of its stock portfolio.