MW Warren Buffett ignores Wall Street, buys more stock in this oil-and-gas company
By Tomi Kilgore
The Berkshire Hathaway CEO spent more than $400 million to buy Occidental Petroleum shares, which just hit a nearly 3-year low amid fears that oil prices may keep falling
Shares of Occidental Petroleum Corp. surged Friday, after Warren Buffett's Berkshire Hathaway Inc. boosted its stake in the oil-and-gas company even as Wall Street was doing the opposite.
But that keeps with the well-known Buffett trading maxim: to be greedy when others are fearful.
Buffett's investment vehicle disclosed late Thursday that its spent $409.15 million this week to buy another 8,896,890 Occidental shares.
Berkshire $(BRK.A)$ $(BRK.B)$ was already Occidental's $(OXY)$ largest shareholder by far. It now owns 264,178,414 shares, or 28.15% of the total outstanding stock - a position valued at $12.54 billion at current prices.
The next-largest shareholder is investment-management firm Dodge & Cox, which holds about 8.3% of Occidental's outstanding shares, according to FactSet data.
The stock was up more than 4% in Friday afternoon trading and on track to snap a six-session losing streak, its longest in a year. It would mark just the third positive day for Occidental shares this month.
The rally comes after the stock had closed Thursday at its lowest price since Feb. 28, 2022, amid worries that oil prices (CL00) (BRN00) would continue to weaken.
The worry is that tariffs proposed by President-elect Donald Trump may hurt economic growth internationally as well as in the U.S., which would weaken demand for crude oil.
Also, oil prices could be hit as Trump's pledge to "drill, baby, drill" boosts supply.
Read: Oil may 'collapse' below $50 a barrel in 2025 if this perfect storm hits the market.
The Energy Select Sector SPDR ETF XLE had initially rallied after Trump's election win, but peaked in mid-November and has been trending sharply lower ever since.
The ETF was rising 0.7% on Friday but was still down roughly 12% in December, which puts it on track for the worst monthly performance since an 18% tumble in June 2022. It has lost around 7% since the election.
Crude-oil futures edged up on Friday, but have shed roughly 3% since the election, while Occidental's stock has slid around 6% over the same time.
Buffett starting buying Occidental shares during the first-quarter of 2022. In Berkshire's 13F regulatory filing in mid-November, the company disclosed that its holding as of Sept. 30 was 255,281,524 shares, the same as the previous quarter.
Since the end of March 2022, the stock has lost more than 16%, while the energy ETF has gained 10% and the S&P 500 index SPX has spiked over 31%.
-Tomi Kilgore
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December 20, 2024 14:17 ET (19:17 GMT)
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