Buffett Resumes Occidental Purchases

Published on October 26, 2023

After a hiatus of nearly four months, Warren Buffett resumed his purchases of Occidental Petroleum this week. Berkshire deployed $246.4 million to acquire 3,921,835 shares of Occidental at an average cost of $62.83, the highest price paid for shares of the oil company up to this point. With very limited exceptions, Mr. Buffett has not been willing to pay over $60 for the stock. 

Berkshire now owns 228,051,027 shares of Occidental with a cost basis of $12.3 billion and unrealized gains of $2.1 billion. Based on Occidental’s share count as of June 30, 2023, Berkshire owns 25.8% of the common stock. I’ve written about Berkshire’s investment in greater detail in the past, including its additional investment in preferred stock and warrants. The most recent two articles provide useful context:

Mr. Buffett began his most recent round of purchases on Monday. On the same day, Chevron announced its intention to acquire Hess in a $53 billion all-stock deal. This followed Exxon’s deal to acquire Pioneer Natural Resources for $60 billion earlier this month, also in an all-stock transaction. As of June 30, Berkshire owned 123,120,120 shares of Chevron which is currently worth $19.2 billion. 

I am not an expert when it comes to predicting the price of oil or the potential for current geopolitical turmoil to cause price spikes. However, the prospect of a wider war in the Middle East is clearly a factor that could have a major impact, particularly if the simmering tensions with Iran boil over into open warfare in the Persian Gulf. 

Did Warren Buffett make his purchases of Occidental this week due to the potential of a broader conflict in the Middle East or in response to Chevron and Exxon’s recent dealmaking? 

One of the enduring misconceptions about Mr. Buffett is that he completely ignores the macroeconomy and geopolitics. This might be true in certain cases, but clearly Berkshire’s investments in Occidental and Chevron are statements on the continuing importance of oil in the global economy. This is inherently related to macroeconomic and geopolitical factors, including the wars currently raging in Ukraine and Israel.

In the past, I shared a spreadsheet which tracks all of Berkshire’s positions in Occidental Petroleum and I’m attaching an updated Excel spreadsheet for paid subscribers at the end of this article since readers have told me that this is useful.

Berkshire is likely to release third quarter earnings on Saturday, November 4. I plan to spend the weekend analyzing the report and will write an article with my thoughts for paid subscribers. We should be able to infer whether there were additional purchases of Chevron in the third quarter and, of course, we will have an update on Berkshire’s subsidiaries. I’ll be particularly interested in GEICO’s results as well as what we can infer about the overall economy through Berkshire’s more cyclical subsidiaries. 

Spreadsheet of Berkshire’s Purchases of OXY Common Stock:

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Individuals associated with The Rational Walk own shares of Berkshire Hathaway.

Buffett Resumes Occidental Purchases