Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) acquired more shares of the billionaire’s favorite oil and gas producer, Occidental Petroleum (OXY), increasing its stake to nearly 29% of the company.
Buffett has said Berkshire has no interest in buying control of Occidental, but the conglomerate has repeatedly been a dip buyer of the Houston-based company as its shares are down about 12% from their April peak. Ahead of the filing on Monday, Berkshire last week announced three separate purchases totaling 7.3 million shares for $176 million.
Occidental shares gained more than 1% on Tuesday, trading above the $61 level.
“Mr. Buffett appears to step in and buy more OXY stock when the stock price falls near or below $60. This offer certainly appears to have put a floor on the stock price,” James Shanahan, stock analyst at Edward Jones, told Yahoo Finance.
Shanahan notes that Berkshire’s $15.4 billion position makes Occidental the sixth-largest stock holding. The company’s largest holding is Apple ( AAPL ), which currently owns about 20% of Berkshire’s market cap, after Berkshire cut its position in the iPhone maker in May.
Berkshire is still heavily involved in the energy business, as Chevron (CVX) remains a top-five holding despite only selling part of its position in March.
“Together with the preferred stock investment in OXY, Berkshire’s bet on oil amounts to almost $43 billion. Interestingly, this total was $41-51 billion at the end of each quarter dating back to March 2022, the quarter in which Berkshire began purchasing OXY,” Shanahan said.
Buffett has been an outspoken supporter of Occidental Petroleum, publicly praising the company’s CEO, Vicki Hollub. He was also instrumental in helping finance Occidental’s 2019 acquisition of Anadarko Petroleum.
In December, Occidental announced it would buy Midland, Texas-based CrownRock for $12 billion, the latest in a series of industry consolidation moves in the Permian Basin.
In a show of confidence, Berkshire Hathaway purchased nearly $600 million worth of OXY stock within three days of announcing the acquisition.
Occidental recently put some of its assets up for sale to acquire the privately held oil and gas producer.
In May, Hollub told Yahoo Finance that the company would scale back share buybacks over the next few years as it focuses on reducing debt.
“We have had a very healthy buyback program in recent years due to the fact that we believe our shares are currently very undervalued,” Hollub said.
Last year, Occidental paid out $600 million in dividends, repurchased $1.8 billion in common stock and repurchased $1.5 billion in preferred stock.
The stock fell 5% in 2023 after rising 119% the year before as oil peaked, making it the S&P 500’s (^GSPC) best-performing stock that year.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
