Warren Buffett’s Berkshire Hathaway boosts stake in Occidental Petroleum
Yahoo Finance Live anchors discuss Warren Buffett’s Berkshire Hathaway boosting its stake in Occidental Petroleum.
Video Transcript
- Warren Buffett turning up the heat as Berkshire Hathaway hikes its stake in Occidental Petroleum now to 26.8%. Of course, he has been inching up that stake in the company really all year long now. And the company also has regulatory approval to buy up to 50%. The "Wall Street Journal" did report earlier that , I believe a couple of weeks ago, that Berkshire was not planning to buy all of the company. But you have to wonder then what is going on here with this stake--
- Yeah. 99%.
- --continuing to creep up. Interesting here this morning there was one Citi analyst that did cut his recommendation on OXY to a neutral from a buy, perhaps after the run that we've seen in the shares based on all this buying that Berkshire has been doing.
- A question about how they would like it to be reported on their own earnings and within their own financial statements as well because this actually gives them even, though they have the permission to buy up to 50% of Occidental Petroleum, this also is critical in the threshold as well that they've crossed in the 26.8% of OXY that they own because that actually gives them the permission to claim the financials as well of Occidental on the Berkshire Hathaway financial statements too.
- Yeah. This is a company that Warren Buffett-- I don't know about himself, but his company Berkshire Hathaway has been sampling all the way back to the merger time when I believe they bought Anadarko. That was a big shale play back in the day. And I believe-- don't quote me on this-- but I believe Warren Buffett is still getting an 8% premium or interest payment on preferred shares to the tune of $10 billion. That's the principal amount.
So he's been milking this. Is he going to buy the entire company? It's been a while since Berkshire Hathaway has done one of these deals. I think Precision Castparts was the last one here. We can take a look at the YFi Interactive. I do have a chart to show. This is a year to date on OXY. And we can see kind of a broadening megaphone pattern here. Difficult to say if this is--
- Broadeing megaphone.
- Yes. There we go. It's very difficult to draw when I have this laptop here. Anyway, here's what's happening today as well as Friday. But I wanted to show the year to date because the energy sector is where we have seen the most gains. ExxonMobil back up to 57.7%. Chevron up. Now, some of these stocks have come off their highs. But Berkshire was one of those stocks at the beginning of the year that was making new highs even as the rest of the market was just falling off a cliff. So pretty interesting to see that develop there.
- And there's actually a big splashy profile today on the CEO of Occidental Petroleum, Vicki Hollub, in the "Wall Street Journal," where it talks about-- actually, it was yesterday I guess-- where it talks about what she's achieved, that outperformance of even the outperforming energy sector year to date for Occidental. Carl Icahn was the big name that was in the company. And he got out of it in the spring. Now she's got Berkshire Hathaway in there instead. And so it just kind of talks about how she's back.
- That was a very controversial decision back in the day to spend that much money on Anadarko. Roundly criticized for it. It did seem like a high premium back in the day, especially when we saw crude prices crashed to -$40 per barrel. It can always get things cheaper. But in the end, appears to be working out here.
- We've got about a minute until the opening bell. Just to add on here, XLE, we've seen that move higher by about 40% year to date at this point. I mean, of course, off the highs that we had seen in early June. But still, for this entire sector, whether it's Warren Buffett getting into Occidental Petroleum and really kind of looking at more of these energy plays as well as where energy itself as a sector has gotten so much attention because of not just the geopolitical tensions and what that's meant for the prices for energy. I think with all of that, there has been a lot of this focus around energy. Of course, Warren Buffett likes moats. And one of the moats this year has been his energy play, perhaps looking at Occidental Petroleum.
- Yes. If we have 30 seconds here, let's go to the YFi Interactive. This is a max chart of XLE. Goes all the way back to the late '90s. And we can see here the recent high in XLE very much testing peaks that we saw in 2014, 2015, all the way back to the global financial crisis. Huge, huge levels here as we, I guess, well, we're torching the--
