Berkshire Hathaway ( (BRK.A) – Get the report from Berkshire Hathaway Inc.) purchased an additional 9.6 million shares of Occidental Petroleum ( (OXY) – Get Occidental Petroleum Corporation report), bringing the behemoth’s total stake to 16.3% as oil prices remain volatile.
The Berkshire conglomerate, led by billionaire Warren Buffett, said it spent $530 million to acquire the shares of the oil company, whose shares rose 1% after the announcement but fell 13% during the last month, according to a regulatory filing.
Berkshire now owns 152.7 million shares, worth about $8.52 billion.
These additional share purchases were made over the past week and build on the $336 million stake purchased in May and the initial purchase in February by Berkshire. The oil producer is now one of Berkshire’s 10 largest holdings.
Buffett, CEO of Berkshire, has acquired declining stocks during the recent market downturn and increased his stakes in several oil companies, including Chevron ( (CLC) – Get Chevron Corporation report).
Billionaire investor Carl Icahn sold shares of Occidental in March after holding a 10% stake for nearly three years. Not only did the activist investor sell his shares in the oil company, but his two remaining board members also quit.
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Icahn is well known for clashing with corporate management, demanding more results. He had reduced his position in the stock.
The investor was unhappy with Occidental’s decision to acquire Anadarko Petroleum in 2019, successfully outbidding its biggest competitor Chevron. Anadarko was acquired for $38 billion by Occidental.
Icahn originally held a 2.5% stake in Occidental, but as oil producer shares fell in March 2020 to below $10 as the global pandemic prompted massive shutdowns, he increased his stake. at 10%, taking advantage of the decline.
In March 2020, Icahn had spent nearly a year criticizing Occidental’s management for its decision to bid on Anadarko to increase its footprint in the shale oil fields. The billionaire also sought to deport Occidental CEO Vicki Hollub.
Another thorn for Icahn was that Buffett, 91, had provided $10 billion in preferred stock financing that Occidental needed to complete the deal.
Icahn, who is now 86, has set his sights on Southwest Gas Holdings ( (SWX) – Get the report from Southwest Gas Holdings Inc. (DE)), a small natural gas utility with a market capitalization of $5.8 billion compared to Occidental’s $52.8 billion. Southwest Gas is considering divesting a subsidiary because Icahn had sought to sell it.
Buffett now has Occidental and Chevron stocks in his portfolio, which is a change for him since his investment style in the past avoided commodity ownership, and it could be a bet that oil prices will stay high in the short term. term. Higher inflation rates in the United States could have been a reason he made the switch, Thomas Hayes, chairman of Great Hill Capital in New York, previously told TheStreet.