“Buy, buy, buy” has become Buffett’s preferred allocation strategy for Occidental Oil.
On Wednesday, July 13, Eastern Time, Berkshire Hathaway, Buffett’s investment company, filed a document with the U.S. Securities and Exchange Commission showing that from July 11 to July 13, the company continued to increase its holdings of Occidental Petroleum shares by 4.3041 million shares. , a total of more than 250 million US dollars, or about 1.68 billion yuan.
So far, Berkshire has held a total of about 179.7 million shares of Occidental Petroleum, with a stock market value of $10.4 billion based on the latest closing price, with a shareholding ratio of 19.2%.
According to industry insiders, Berkshire is currently the largest shareholder of Occidental Petroleum, and it is only one step away from “consolidating” it. Once the “consolidation” is successful, it may boost Berkshire’s earnings performance.
Continue to overweight Occidental Oil
In the first three trading days of this week, Buffett once again added to Occidental Oil.
On Wednesday, July 13, Eastern Time, Berkshire Hathaway, Buffett’s investment company, filed a filing with the U.S. Securities and Exchange Commission showing that between July 11 and July 13, the company was long on Occidental Oil shares every day. Subsequent addition. During the period, a total of 4.3041 million shares were purchased, and the transaction price was between US$56.85 and US$59.85, with a total investment of over US$250 million, which is about 1.68 billion yuan at the latest exchange rate between US dollars and RMB.
So far, Berkshire has held a total of about 179.7 million shares of Occidental Petroleum, and its shareholding ratio has risen to 19.2%. Based on Occidental Petroleum’s latest closing price of $58.01, Berkshire’s shareholding in Occidental Petroleum has a market value of $10.4 billion, or about 70 billion yuan at the latest dollar-to-renminbi exchange rate.
It is reported that since the first quarter of this year, Berkshire has continued to buy Occidental Petroleum shares, bringing Berkshire’s net expenditure on stocks to $41 billion in the first quarter, making it one of the most active buying windows in the company’s history. . Since June, as Occidental Petroleum’s stock price has fallen, Berkshire has actively increased its positions many times.
Occidental Petroleum did not live up to the favor of the “stock god”. Since the beginning of 2022, with the gradual rise of oil prices, Occidental Petroleum has shown a continuous upward trend as a whole.
According to Wind data, Occidental Petroleum rose from around $29 at the beginning of the year, and rose to a high of $73.90 during the year on May 31, an increase of 139.63% during the period. Then Occidental Oil adjusted, and since the beginning of June, it has fallen by 16.15%. Since the beginning of the year, Occidental Oil has risen 100.94%.
“Consolidation” is one step away
“For Occidental Oil, we can buy as much as we can,” Buffett’s previous remarks and aggressive buying actions aroused speculation about whether Berkshire would acquire Occidental Oil.
Industry insiders said that regardless of whether the “stock gods” will buy Occidental Petroleum, if it continues to increase its positions in Occidental Petroleum, Berkshire may consider making accounting adjustments to include its share of Occidental Petroleum’s profits in its own performance. .
Usually, according to the principles of equity accounting, once investors own 20% of a company’s common stock, then the company’s earnings should have a corresponding share in their own performance. Berkshire’s stake in Occidental has risen to 19.2% so far.
If the “consolidation” is successful, it will bring significant benefits to Berkshire. Analysts expect Occidental to earn $10 billion this year, so if Berkshire ends up owning a 20 percent stake in Occidental, Berkshire could Profits reported this year could rise by $2 billion.
In addition to adding to its position, Berkshire has another way to quickly increase its stake in Occidental: by exercising warrants, said Cathy Seifert, an analyst at CFRA, an independent investment research firm.
In addition to the underlying stock, Berkshire also has warrants for 83.9 million Occidental shares. If Buffett exercises the warrants, Berkshire’s stake in Occidental will reach more than 25%.
Why “die” oil stocks
Why did Buffett “die” for Western oil this year?
In the eyes of analysts, from the company’s fundamental point of view, Buffett may be full of confidence in the long-term prospects of Occidental Petroleum, especially optimistic about the continuous improvement of Occidental Petroleum’s debt problems. Buffett is betting that U.S. inflation will run high, and he has hedged the risk of high inflation by buying oil stocks.
According to Berkshire’s first-quarter 13F holdings report disclosed in May this year, the company’s top five heavyweight stocks were Apple, Bank of America, American Express, Chevron and Coca-Cola. Among them, Apple, the largest holding stock, accounts for up to 40% of the investment portfolio.
Since the beginning of this year, in the context of continued high inflation in the United States, the shortage of the supply chain in the United States has not been significantly improved, and the life of American technology companies has not been easy. Apple shares have fallen nearly 18% since the beginning of the year.