The "god of shares" under Buffett$Berkshire-A (BRK.A.US) $/$Berkshire-B (BRK.B.US) $Continued to increase its holdings last week.$Western Oil (OXY.US) $Stock. Buffett bought 794000 shares of Western Oil at $55.40 per share, costing about $44 million, according to a document released Monday local time.

Recently, Berkshire bought a total of 9.5 million Western oil shares on June 17 and June 22. To date, Berkshire holds 153.5 million western oil shares worth about $9 billion, accounting for about 16.4% of the total outstanding shares of western oil, making it by far the largest shareholder of western oil companies, while asset management giant Vanguard ranks second with 10.9%.

While Berkshire Hathaway's recent bet on a big oil company made headlines, it's not the first time Buffett has invested in Western oil.

In 2019, Berkshire spent $10 billion on preferred shares in Western Oil to help it acquire Houston-based energy producer Anadarko Petroleum. Western Oil pays an annual dividend of 8 per cent on the preferred stock and provides Berkshire with $200m in quarterly dividend income. Berkshire also received 84 million warrants in the deal at an exercise price of $59.624. If warrants are included, Berkshire Hathaway owns about 1/3 of Western oil companies.

Western Oil said at its earnings meeting in May that it expected to launch a $3 billion share buyback program in the second quarter. If the plan is implemented, Berkshire's stake in western oil will rise.

Analyst: Berkshire has a "good chance" of buying Western Oil

Neal Dingmann, an analyst at Truist, said Berkshire Hathaway had a "good chance" of buying western oil, raising its target price to $93 and maintaining a "buy" rating.

Dingmann said that because western oil debt could soon fall below $20 billion (currently $25 billion + $10 billion of preferred stock), the company "will soon become IG". In addition, given the persistence of positive factors such as free cash flow / debt repayment, western oil could reach investment grade as soon as possible or even this year. The analyst saidOnce Western Oil reaches investment grade, a takeover offer is expected..

The analyst expects Western Oil to continue to "implement plans to relatively maintain the type of capital, focusing on sustained free cash flow averaging more than $3 billion a quarter." "

However, the market has a different view thatGiven that Western Oil's debt and preferred shares account for as much as 60% of its capital, Buffett is unlikely to buy the company completely..

Berkshire has made many acquisitions in its history. However, Berkshire also often holds a significant stake in a company for a long time, but does not go any further. Healthcare company Davita, financial giant American Express Co and food industry leader Kraft Heinz are all examples of companies in which Berkshire owns about 20% or more. In none of these cases, Berkshire has made any further efforts to seek ownership.

Strong commodity prices will benefit oil producers in 2021. Of the 11 sectors in the s & p 500, energy is the best performer so far in 2021, with a return of 53%, well ahead of the s & p 500's 27% gain for the year. This gap will widen further in 2022. The energy sector has risen more than 50 per cent year-to-date, while the S & P 500 is down 14 per cent over the same period. This reason is not difficult to understand: before the conflict between Russia and Ukraine further pushed up oil prices, oil prices were already in a clear upward trend, but western oil rose more than most of its peers, rising by 127% by 2022.

Shares in western oil companies have risen recently as oil prices have risen, rising 2.4% to $58.90 on Monday. Western oil shares have risen 103 per cent since the start of the year.