Berkshire Hathaway, the multinational conglomerate led by CEO Warren Buffett, has recently increased its stake in Occidental Petroleum, purchasing 10.5 million shares for approximately $590 million. This brings Berkshire Hathaway's total stake in the energy company to 238.5 million shares, valued at $13.6 billion, representing a 27% interest.
Taking advantage of the recent decline in Occidental Petroleum's stock price, which hit a 52-week low on Tuesday, Warren Buffett's investment firm made these purchases from Monday through Wednesday at an average price of around $56 per share. These latest transactions mark Berkshire Hathaway's first purchases of Occidental Petroleum stock since late October.
The timing of these purchases serves as a vote of confidence by Buffett in Occidental Petroleum and its CEO Vicki Hollub. This comes after the company announced its acquisition of privately held energy producer CrownRock for $12 billion on Monday.
It was previously speculated that Berkshire Hathaway refrained from purchasing Occidental Petroleum stock on the open market due to ongoing negotiations between Occidental and CrownRock, which came to light in late November. However, with this recent investment, Buffett has shown his support for Occidental and its potential for growth.
Despite the skepticism surrounding the deal on Wall Street, as evidenced by a 5% decline in Occidental's stock since the news of the negotiations broke, the shares experienced a 3% gain on Wednesday, reaching $57.22.
While some analysts view the purchase price as high and express concerns about Occidental's already leveraged balance sheet, acquiring debt to finance the CrownRock deal could prove advantageous if energy prices rise in the future.
These purchases by Berkshire Hathaway represent one of the largest three-day buying periods for the company since it began publicly disclosing its acquisitions of Occidental Petroleum stock in 2022. As a 10% stakeholder, Berkshire Hathaway is required to disclose any buys or sells within two business days.