Berkshire Hathaway increases stake in Occidental Petroleum

8 Jul 2022 , 09:05 AM

Warren Buffett’s Berkshire Hathaway Inc., which owns another 12 million shares of Occidental Petroleum Corp., increased to 18.7% on Thursday. According to a filing with the U.S. Securities and Exchange Commission, Berkshire made the transactions on Tuesday and Wednesday for a total of $698 million.

Additionally, 9.9 million Occidental shares were bought by Buffett’s business last week. With 175.4 million shares worth $10.8 billion, it is by far the largest stakeholder of the Occidental company based near Houston.

In addition, Berkshire holds warrants to purchase an additional 83.9 million common shares for $5 billion, or $59.62 per share and owns $10 billion of Occidental preferred stock. That is a little less than the shares’ closing price on Thursday of $61.47.

The price of Occidental’s shares has more than doubled this year, thanks in part to Berkshire’s acquisitions and to rising oil prices as a result of Russia’s invasion of Ukraine. Market rumors about Buffett’s company potentially acquiring the entirety of Occidental have been sparked by Berkshire’s increasing shareholding.

Berkshire may take into account an accounting reform that would allow it to register its proportionate share of Occidental’s earnings with its own results if the investment hit 20%. Berkshire accounts for its 26.6% interest in packaged food giant Kraft Heinz Co using the equity method.

The BNSF railroad, Geico auto insurer, and name-brand energy company are just a few of the several companies owned by Buffett’s Omaha, Nebraska-based conglomerate. It also has shares of Apple Inc. and Bank of America Corp.

Since Occidental paid $35.7 billion for Anadarko Petroleum Corp in 2019, it has been paying down debt. The purchase of Berkshire’s preferred stock aided in funding the transaction. The share price of Berkshire has decreased by 7% this year, compared to the Standard & Poor’s 500’s 18% reduction.