Berkshire Hathaway, the conglomerate owned by legendary investor Warren Buffett, has increased its stake in Occidental Petroleum, now owning just over 25% of the oil company. In a recent filing with the Securities and Exchange Commission, it was revealed that Berkshire Hathaway purchased an additional 2.1 million shares of Occidental at a total value of $123 million. This brings Berkshire’s total ownership of Occidental to 224 million shares, worth approximately $13 billion. This represents a quarter of the entire value of Occidental, which has a total market cap of $52.56 billion. Occidental’s shares traded at $58.52 on Friday, down 4% from the beginning of the year. Berkshire Hathaway’s Class A shares traded at around $515,550, up 9% year-to-date, while Class B shares traded at $339.59.
Warren Buffett has been bullish on Occidental Petroleum, consistently purchasing large amounts of the stock over the past year. This was in response to the surge in oil and natural gas prices following Russia’s invasion of Ukraine. However, Buffett has stated that he has no interest in taking over Occidental. Last August, Berkshire gained regulatory approval to potentially own up to 50% of the company.
Although energy prices have eased from their highs last summer, analysts predict another surge in prices later this year, especially if China’s economic reopening leads to a significant increase in oil demand. Experts suggest that revived demand in China could result in Brent crude, the international benchmark, reaching close to $100 a barrel. However, China’s reopening hasn’t been as successful as anticipated, with real estate and factory activity slowing significantly. Additionally, a $88 billion trade surplus in early 2023 indicates weak domestic demand.
In conclusion, Warren Buffett’s Berkshire Hathaway has further increased its stake in Occidental Petroleum, now owning just over 25% of the oil company. Despite the eased energy prices, Berkshire Hathaway continues to be positive about the future prospects of the industry and anticipates another surge in prices later this year. However, the success of this prediction will largely depend on the economic reopening of China and its impact on oil demand.
