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.
- 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
