Berkshire Hathaway Increases Occidental Stake to Nearly 29%, But Takeover Unlikely

Warren Buffett’s Berkshire Hathaway has been on a buying spree, accumulating shares of Occidental Petroleum for the past nine trading days. According to regulatory filings, this aggressive buying has pushed Berkshire’s ownership stake in the oil and gas giant to nearly 29%.

Aggressive Buying Drive

Based in Omaha, Nebraska, Berkshire Hathaway has been steadily adding Occidental shares to its portfolio since June 5th. The filings reveal that the conglomerate purchased an additional 7.3 million shares, with prices hovering around $60 per share.

This recent buying binge has brought Berkshire’s total holdings to over 255 million shares, translating to a significant 28.8% ownership stake in Occidental. This makes Occidental the sixth-largest holding in Berkshire’s portfolio and solidifies Berkshire’s position as Occidental’s largest institutional investor by a significant margin.

Beyond Common Stock Ownership

Berkshire Hathaway’s financial ties to Occidental extend beyond common stock ownership. The conglomerate also holds $10 billion in Occidental’s preferred stock, further strengthening its financial connection to the company. Additionally, Berkshire possesses warrants to purchase another 83.9 million common shares at a price of $5 billion, or $59.62 per share. These warrants were acquired as part of a 2019 deal that helped finance Occidental’s acquisition of Anadarko Petroleum.

With the recent stock price closing at $60.2 on Monday, these warrants are now considered “in the money,” meaning they can be exercised for a profit. If Berkshire were to redeem all its preferred stock holdings, its ownership stake in Occidental could potentially surpass 40%.

Takeover Unlikely Despite Growing Stake

Despite the substantial increase in ownership, Warren Buffett has explicitly stated that he has no intention of taking full control of Occidental, a company with a rich history dating back to its founding by oil tycoon Armand Hammer. Speculation of a potential takeover surfaced earlier when Berkshire received regulatory approval to acquire up to 50% of Occidental’s shares.

However, Buffett’s recent comments suggest a focus on long-term investment rather than a complete acquisition.