As the price of a barrel of oil near multi-month lows, Warren Buffett did not stop buying shares in Occidental Petroleum (OXY.US), a US oil&gas company.
Between May 25 and 30, Berkshire Hathway bought another 4.66 million Occidental shares for about $275 million, at prices ranging from $58.3 to $58.85. Buffett's investment vehicle now holds 222 million shares worth about $13 billion (24.9% of the company). During the week of May 11 and 18, Buffett bought shares daily. By 2022, Buffett was buying Occidental shares in the $57-$61.5 range.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app- Buffett's aggressive buying may indicate that the base scenario for the billionaire and his Berkshire Hathaway fund is not a global recession or a deep economic downturn. Buffett is also known for buying company stocks when, in his judgment, they are cheap - without trying to forecast whether the sell-off will deepen.
- Last year, Buffett described his purchases of Occidental shares as a long-term bet on rising oil prices and praised Occidental Petroleum's current CEO, Vicki Hollub, saying that if he were running the company - he wouldn't do anything differently. He indicated, however, that he does not intend to take over the entire company;
- As Buffett quickly sold off his newly-acquired stake in Taiwanese semiconductor maker TSMC in Q4 and continues to increase positions on Occidental shares, speculation has arisen that Buffett's investment was intended as a hedge in the event of a possible militant conflict in the Taiwan Strait, which could potentially lead to higher oil prices.
- Occidental's Q1 report was mixed as lower oil and gas prices weighed on results. Revenue fell 13% year-on-year to $7.26 billion, while earnings per share fell 48% to $1.09 per share. Pre-tax profit from oil and gas fell 36% y/y. Free cash flow fell 33% to $1.69 billion.
The price for a barrel of Texas WTI crude oil (yellow chart) fell from $130 at its peak to $70 in recent days. At the same time, Occidental shares remained less volatile and retreated from $78 to $58 - where Buffett is active. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
