To The Moon

Surprise News ! On Tue, 30 Sep 2025, it was reported by WSJ that $Berkshire Hathaway(BRK.B)$ will be acquiring $Occidental(OXY)$ Petrochmical unit OxyChem, for nearly $10 billion. (see below) The deal would be Berkshire’s largest since 2022, when it bought insurer Alleghany for $11.6 billion. It took more than 6 months to close, first announced in March 2022 and finally completed in October 2022. FYI… Berkshire has more than $300 billion in cash, waiting to be invested really. Relations Thru The Years. The relationship between Berkshire and Occidental is a ‘unique’ one - it goes way back. BRK.B purchase history of OXY - from 2022 onwards - In 2019, Buffett helped bankroll Occidental’s purchase of Anadarko Petroleum with a $10 billion commitment. In return, it received preferred shares & warrants to buy common stock in return. In early 2022, Buffett started buying OXY in the open market, after reading a transcript of the oil company’s earnings conference call. He took advantage of the heightened volatility in the Covid pandemic to scoop up the shares at a discount. As of end June 2025, BRK.B owned more than $11 billion worth of OXY (or a 28.2% stake). During his reign, Buffett previously said he would not take full control of OXY, founded by legendary oilman Armand Hammer. OxyChem Profit Trend thru the years. OxyChem has been profitable for the past 5 years. However, they varied significantly, year by year; not something Wall Street likes. (see below) In 2022, OxyChem achieved peak pre-tax income around $2.5 billion, reflecting very strong profitability due to favorable market conditions for chemicals and PVC. In 2023, earnings declined sharply but remained profitable, as industry pricing & demand softened relative to the prior year peak. For 2024, reported pre-tax income dropped to around $1 billion, still positive but less than half (-50%) the earnings in 2022. Management guidance for 2025 indicates another year of profitability, though at subdued levels when compared to 2022’s highs. Expectations for OxyChem's performance in 2025 remain positive but below previous peak years. It is safe to conclude that no year within OxyChem’s past 5 years witnessed the segment operating at a loss; every year has been profitable, albeit with significant swings due to commodity and market cycles. OXY Profit Trends thru the years. The same could be said about OXY’s revenue as well. (see below) OXY’s quarterly revenue saw fluctuations but remained between $5.98 billion and $7.17 billion from Q3 2023 thru Q2 2025. Annually, revenue has been declining post FY 2022 - (a) $28.26 billion (for year 2023) and (b) $26.73 billion (for year 2024) Profitability has been less consistent at the quarterly level, with volatility. Case in point, Q1 2024 saw a notable dip, but overall net income remained positive for most quarters. (see above) Wall Street Thinks. Overall Wall Street thinks the move by Berkshire Hathaway to buy OXY’s chemicals business is: A double win for Berkshire. And Buffett’s potential swan song deal before Buffett retires on 31 Dec 2025. However, the 02 Oct 2025 (confirmed) deal is the first-ever Berkshire announcement that quotes incoming CEO Greg Abel and did not mention the current chief executive by name. Wolfe Research. According to Wolfe Research, Energy analyst - Doug Leggate: The OxyChem business will operate as a strong stand-alone for Berkshire. This deal should boost Berkshire’s nearly 30% ownership of parent OXY. This is because OXY will use $6.5 of nearly $10 billion of sales proceeds to reduce debt and bring its principal debt below the $15 billion target it set following the late 2023 acquisition of Permian Basin oil producer CrownRock for $12 billion. As a result, BRK.B’s ownership of OXY shares will become more valuable and stable due to (a) improved financial health and (b) reduced leverage. It might also potentially making OXY stock more attractive to other investors as well, in the process. Pickering Energy Partners consulting and research firm. At the same time Founder & Chief investment officer - Dan Pickering observed and compared: BRK.B’s likely double win for both OxyChem and Oxy to a “circular loop”. Just like booming AI sector’s recent investments in one another’s companies: AI is in a circular loop where $NVIDIA(NVDA)$ gives money to somebody, who gives money to somebody, who gives it back to Nvidia. My Viewpoints : (mine only !) The Fall ! The surprise on 02 Oct 2025 (after OxyChem sale was confirmed), parent-stock OXY fell by -7%. (see below) The irony was OXY had outperformed the S&P Oil & Gas Exploration & Production ETF by about +2.5% the week thru’ 01 Oct 2025, largely baking in the deal before the 02 Oct 2025 announcement. Besides that, Berkshire shares fell marginally too by -0.46%. (see below) Is this US traders way of letting the market and Buffett / Abel know that they are not keen about the purchase ? Slowing Growth ? In a report by Atradius N.V. 2025 out in early 2025, the chemical industry in the coming years will see (a) Asia Pacific continue to be the main driver of chemicals growth, (b) followed by the US chemicals sector, that benefited from shale gas supply. Growth estimates for H2 2025 and into 2026: (see below) America is poised to grow at a decelerating rate. Both Asia Pacific and Europe will grow at accelerating rate. Berkshire’s Shifting Priority. With under 3 months left before Mr Buffett officially step down as Berkshire’s CEO, it looks like he is ‘re-positioning’ the company into a defensive stance. Looking at BRK.B’s recent 13F filings: It is a deliberate shift led by Buffett & Abel toward sectors characterized by stable, cash-generating businesses. It is reducing BRK.B’s exposure in high-valuation, growth-oriented technology stocks like $Apple(AAPL)$. At the same time, piling into (a) Industrial, (b) Transportation, (c) Housing (construction-related), and (d) Healthcare sectors. (see below) BRK.B owns approximately 5.04 million shares of $UnitedHealth(UNH)$. As of 30 Jun 2025, its valued at about $1.57 billion. This stake represents a relatively small portion of Berkshire's overall equity portfolio, that is valued around $300 billion. Making UNH about 0.5% - 0.6% of the BRK.B stock portfolio by value. More importantly, the investment marks a notable entry into healthcare insurance sector by Berkshire. This strategic balance should support long-term shareholder value and sustain Berkshire’s core investment philosophy amid evolving market conditions. Remember to check out my other posts. (See below). Help to Repost ok, Thanks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. No Govt No Reports. Oct 2025 Cut Still On ? Mon, 06 October. Pick post. TSLA Q3 Delivery Sparks a Rally to $500 ? Fri, 03 October. Pick post. KLAR : Just a BNPL Stock or Next BIG Thing ? Thu, 02 October. Pick post. Do you think OXY has been strategic in its sale of OxyChem and in the process shore up its value (by reducing debt) ’? Do you think BRK.B has been strategic in its gradual re-balance away from IT & Financials and into Health & Chemicals ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. Thank you. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents