Warren Buffett adds massive stake in Occidental Petroleum, buying dip after oil prices crash

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Topline

With oil prices falling this month, billionaire investor Warren Buffett is buying the dip again by adding to one of his favorite energy stocks, as his investment conglomerate Berkshire Hathaway bought for around 500 million dollars worth of Occidental Petroleum stock this week.

Highlights

Buffett’s Berkshire Hathaway bought about 9.5 million shares of Occidental over the past week at a cost of nearly $530 million, according to a new regulatory filing late Wednesday.

After a buying spree that began in late February, Buffett’s investment conglomerate now owns about 152 million shares of Occidental, a 16.3% stake worth nearly $8.5 billion. dollars which makes Berkshire by far the largest shareholder in the energy giant.

Shares of Occidental Petroleum failed to rally on the news on Thursday, but they remain one of the best performing stocks this year, rising more than 90% on the back of the massive oil price spike that erupted. is produced this year.

Although oil has soared this year, hitting a high of nearly $140 a barrel since Russia invaded Ukraine in late February, prices have moderated this month, with energy stocks slashing some from their sizable early 2022 gains.

Oil continued to fall on Thursday: US benchmark West Texas Intermediate price sits near $105 a barrel (down from nearly $120 in early June), while international benchmark Brent crude trades at $110 a barrel. barrel.

Buffett is betting the oil and gas price spike won’t end anytime soon and is using some of the recent declines as a buying opportunity as analysts predict oil will stay well above $100 a barrel throughout throughout the summer.

Key context

The S&P 500 energy sector has been the best performing area in the market amid the sharp selloff so far this year, up more than 20% from the more than 20% decline in the ‘benchmark. While experts agree that energy companies have “made solid profits”, others predict that oil prices could “peak” and could moderate by next year.

crucial quote

“Oil volatility will remain high now that opposing views are emerging on where prices will end the year,” predicted Edward Moya, senior market analyst at Oanda. Prices are “under pressure” amid global recession fears and high inflation, with “all near-term drivers turning negative for the outlook for crude demand.”

Tangent

Buffett’s other favorite energy stock is Chevron, whose shares are up more than 18% this year. With a massive stake of around $26 billion, it is one of the billionaire investor’s top holdings after Apple and Bank of America.

Big number: $92.1 billion

That’s what Buffett is worth, according to TSWT‘ calculations. He is the ninth richest person in the world.

To monitor

The latest move fuels further speculation that Buffett could increase his stake in Occidental to 20% – or go even further and try to buy the whole company.

Further reading

Energy stocks surge as oil rises again – prices will remain high through the summer (TSWT)

Warren Buffett’s $51 Billion Stock Market Shopping Spree: Here’s What He’s Buying (TSWT)

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