Economy News – Follow-up
Berkshire Hathaway, led by esteemed investor Warren Buffett, increased its shareholding in Occidental Petroleum following a significant decline of over 30% from the company’s peak valuation. The Omaha, Nebraska-based conglomerate purchased 763,017 shares from the oil and gas production firm for approximately $35.7 million, as detailed in a recent organizational filing. With this acquisition, Berkshire now holds a commanding 28.2% stake in Occidental.
In April, Occidental’s stock price fell roughly 32% from its all-time high, contributing to an overall year-to-date decline of more than 17%, even as oil prices saw a considerable increase. This recent downturn in stock value has marked a notable shift in the market.
Notably, in late December, Berkshire made a strategic investment by buying around 8.9 million shares of Occidental amid widespread market volatility. This investment positions Occidental as the sixth largest equity holding in Buffett’s portfolio, reflecting the durability of his investment strategy.
Buffett has clarified that he does not intend to pursue full ownership of Occidental, a company founded by Armand Hammer, despite speculation surrounding the potential for increased control following Berkshire’s recent organizational approval allowing for a possible 50% acquisition stake.
In previous statements, Buffett indicated that his interest in Occidental shares began after reviewing their financial performance during a recent earnings call. The company’s attractiveness is further enhanced by a 1.8% dividend yield, alongside its ongoing investments in carbon capture technologies.
Berkshire Hathaway also holds $10 billion in preferred stock within Occidental and possesses rights to purchase 83.9 million common shares at a total cost of $5 billion, or $59.62 per share, showcasing a robust commitment to the energy sector’s potential for recovery and growth.
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