Warren Buffett notches a $4 billion gain on Occidental Petroleum in under 6 months – as the energy stock nears a 4-year high

  • Warren Buffett’s Berkshire Hathaway has made $4 billion on Occidental Petroleum stock this year.
  • Berkshire spent about $10 billion for a stake in the oil-and-gas company that’s worth $14 billion today.
  • Buffett’s company has registered the large, unrealized gain in under six months.

Warren Buffett’s Berkshire Hathaway has racked up a $4 billion gain on Occidental Petroleum in under six months, thanks to the energy stock surging to nearly a four-year high.

The famed investor’s conglomerate poured about $10 billion into the oil-and-gas explorer and producer between February 28 and August 8, a Markets Insider analysis of company filings shows. It amassed 188 million shares, or just over 20% of Occidental, at prices ranging from $41 to $60.

Occidental’s share price has ballooned by about 83% since Berkshire started buying the stock. It now trades at around $75, its highest level since November 2018, giving Berkshire’s stake a value of a little over $14 billion. In other words, Buffett and his team have scored a roughly 42% unrealized gain on the stock in less than half a year.

Berkshire has signaled it plans to buy even more shares. It recently secured regulatory approval to raise its stake in the fossil-fuel specialist to 50%, or double the previous 25% ownership limit.

The conglomerate already owns $10 billion of Occidental’s preferred stock. It also has warrants to buy 83.9 million common shares at a fixed cost of $5 billion, which it received in exchange for financing the energy company’s takeover of Anadarko Petroleum in 2019.

Buffett warmed to Occidental this spring after its CEO Vicki Hollub outlined her plan to refocus the company. She wants to slash its debts, bolster its cash flows, and ramp up shareholder returns.

“What Vicki Hollub was saying made nothing but sense,” Buffett said during Berkshire’s annual shareholder meeting in April.

“I decided that it was a good place to put Berkshire’s money,” he said about Occidental stock.

At the time, the 91-year-old investor highlighted rampant speculation and manic trading of Occidental shares, which enabled Berkshire to buy 14% of the company in about three weeks.

Along with other oil-and-gas companies, Occidental has benefited from higher energy prices this year as a result of Russia’s invasion of Ukraine disrupting global supplies.

Buffett and his colleagues seem confident that prices will stay high for a while, given they’ve more than quadrupled their stake in Chevron this year too, and now own $26 billion of the oil major’s shares.

Read more: Veteran investor Steven Check has $655 million riding on Warren Buffett’s Berkshire Hathaway. He explains why he’s still bullish on the stock, and analyzes Buffett’s $50 billion stock-buying spree this year.

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