Berkshire Hathaway Inc . (NYSE:BRKa) (NYSE:BRK.A), led by renowned investor Warren Buffett, has made a significant investment in Occidental Petroleum Corp (NYSE:NYSE:OXY) by purchasing shares valued at more than $153 million. The transactions, which occurred over a span of three days, have bolstered Berkshire's already substantial holdings in the energy company.
The series of purchases began on June 5, 2024, with Berkshire acquiring 524,340 shares at a weighted average price of $59.7452 per share. This was followed by a purchase of 654,293 shares on June 6 at an average of $59.9342 per share, and a final acquisition of 1,386,844 shares on June 7 at $59.6687 per share. These transactions have brought the total value of shares bought to approximately $153.29 million, with prices ranging from $59.6687 to $59.9342.
Following these purchases, Berkshire Hathaway's stake in Occidental Petroleum has increased significantly. The company now holds a total of 250,583,605 shares, further cementing its position as a major shareholder in the energy and transportation sector.
Investors have been closely monitoring Berkshire Hathaway's moves, as the company's investment decisions are often seen as a signal of confidence in the long-term prospects of the businesses they invest in. Occidental Petroleum, with its focus on crude petroleum and natural gas, represents a key component of Berkshire's investment strategy in the energy sector.
Berkshire Hathaway's involvement with Occidental Petroleum is not limited to common stock. The conglomerate also holds Series A Preferred Stock and warrants to purchase additional shares of common stock, indicating a deep and multifaceted financial interest in the energy company's performance.
The transactions were disclosed in a regulatory filing with the Securities and Exchange Commission, which provides transparency into the trading activities of corporate insiders and major shareholders. As of now, the market is observing how these recent acquisitions by Berkshire Hathaway will influence Occidental Petroleum's stock performance and the broader energy market.
In other recent news, Occidental Petroleum has been making significant strides. The company reported strong first-quarter results in 2024, with record production levels and substantial cost reductions. The company's Midstream and OxyChem segments also exceeded expectations, contributing to an improved cash flow of over $1 billion. As part of its strategy to boost free cash flow and reduce debt, Occidental has planned a divestiture program worth $4.5 to $6 billion and anticipates the completion of the CrownRock acquisition.
The company's stock, however, was downgraded from Buy to Hold by Truist Securities, following the analyst's projection that the benefits from the CrownRock acquisition might not be as significant as those from other recent deals. The analyst also forecasts that Occidental Petroleum will prioritize debt reduction, resulting in minimal returns to shareholders in the upcoming quarters.
Occidental Petroleum was also a prominent figure in recent fundraising events for former President Donald Trump's campaign, where Trump championed the oil and gas industry. These recent developments highlight the company's ongoing efforts to strengthen its operations and financial health amidst a dynamic market environment.
InvestingPro Insights
Berkshire Hathaway's increased stake in Occidental Petroleum (NYSE:OXY) comes at a time when the energy company exhibits a mix of strong fundamentals and intriguing market signals. According to InvestingPro, Occidental's stock appears to be in oversold territory based on the RSI metric, which could suggest a potential rebound in the near future. This aligns with Berkshire Hathaway's strategy of buying undervalued assets.
On the financial front, Occidental boasts a market capitalization of $52.75 billion, a testament to its significant presence in the energy sector. Its P/E ratio stands at 15.12, which may be attractive to value investors, especially when considering the company's consistent history of dividend payments for over 51 years. Furthermore, the company's gross profit margin remains robust at 59.58% for the last twelve months as of Q1 2024, indicating efficient operations and strong pricing power.
Despite a revenue decline of 23.95% in the same period, analysts predict Occidental will remain profitable this year. With nine analysts having revised their earnings downwards for the upcoming period, investors may want to keep an eye on the company's ability to navigate the challenging market conditions. For those interested in exploring further, there are additional InvestingPro Tips available that could provide deeper insights into Occidental's performance and outlook. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the value these tips could add to your investment decisions.
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