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In his annual letter to shareholders, released less than a week ago, Warren Buffett lamented that he couldn’t “find a few things we care about” in the stock markets.
However, a new SEC filing filed Friday night showed that someone at Berkshire Hathaway, whether it be Buffett himself or his portfolio managers, is very excited about Occidental Petroleum.
As of Friday, Berkshire owns 91.2 million shares of the oil giant’s common stock. They are worth $5.1 billion at a close of $56.15 tonight. Shares are up 18% today and 45% this week.
It rose sharply along with the price of oil, which skyrocketed to about $115 a barrel after the Russian invasion of Ukraine.
And while Occidental was growing, Berkshire was buying.
More than 61 million shares now in his portfolio were purchased on Wednesday, Thursday and today at prices ranging from $47.07 to $56.45.
The remaining 29 million shares were purchased this year no later than Tuesday. (Berkshire said it held no shares in OXY as of Dec. 31 in its latest 13F report.)
Berkshire did not respond to a CNBC request for comment Friday night.
We don’t know exactly when it bought or how much Berkshire paid for those 29 million shares because it hasn’t yet reached the 10% holding level that requires new purchases to be disclosed within a day of making them.
Berkshire owns only about 9% of Occidental’s common stock. But he also has orders to buy another 83.9 million shares at $59.62.
Even though the warrants were not exercised, for the purposes of the SEC filing trigger, they must be accounted for, technically making Berkshire’s stake over 17%.
Berkshire received those warrants in a deal that effectively included a $10 billion loan in 2019 to Occidental to help it buy Anadarko for $38 billion.
The loan, in the form of Berkshire’s purchase of preferred shares, requires Occidental to pay dividends of 8% per annum. This amounts to $200 million each quarter.
At the time, Buffett told CNBC that it was a bet that oil prices would rise in the long term.
Berkshire bought a relatively small stake of just under 19 million shares in the second half of 2019. At the end of that year, it was estimated at about $780 million.
In the short term, Buffett bet that oil prices collapsed in early 2020 due to the onset of the COVID-19 pandemic.
To save cash, Occidental made equity payments on the Berkshire loan in the first and second quarters. (After that, he resumed cash payments.)
Berkshire received 17.3 million shares in the first quarter and 11.6 million shares in the second quarter.
But its 13F filings did not list any OXY shares at all as of June 30 and September 30, 2020, indicating that amid the oil market carnage, the company sold both the 19 million shares it bought and nearly 29 million shares, which she received as a dividend payment.
Now that oil prices have risen again, it has returned to Berkshire’s portfolio in a big way.
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