Source: Brokerage China Author: Chen Ming
After a four-month hiatus, Buffett once again increased his holdings in Occidental Petroleum.
During June 6th to 7th, Berkshire Hathaway, under Buffett's control, increased its holdings of 2.5655 million common shares of Occidental Petroleum. The previous increase was in early February.
Recently, Occidental Petroleum's stock price has shown a roller-coaster trend, rising more than 20% from mid-January to mid-April, and then dropping 14% from April 12th to May 7th. The company's latest market capitalization is 52.7 billion U.S. dollars.
What signal did Buffett's increase during this period release?
Buffett holds Occidental Petroleum stocks worth $14.9 billion.
Documents disclosed on the website of the U.S. Securities and Exchange Commission show that from June 6th to 7th, Berkshire Hathaway increased its holdings of common shares of Occidental Petroleum for two consecutive days, with a total of 2.5655 million shares, costing about 153 million U.S. dollars.
As of now, Berkshire Hathaway holds 250.58 million shares of this energy producer, and its current stock price is $59.48 per share, with a market value of about $14.9 billion.
Buffett's previous increase was in early February this year. According to documents disclosed on the website of the U.S. Securities and Exchange Commission, from February 1st to 5th, Berkshire Hathaway purchased a total of 4.3 million shares of Occidental Petroleum stock, costing about 245.9 million U.S. dollars, with an average purchase price of $57.18 per share.
Buffett's investment in Occidental Petroleum began in 2019. Starting from the first quarter of 2022, Berkshire Hathaway bought Occidental Petroleum stock in large quantities for three consecutive quarters, increasing its holdings to 20.9% and becoming the largest single shareholder of Occidental Petroleum. In August 2022, Berkshire Hathaway obtained permission from the U.S. Federal Energy Regulatory Commission to purchase up to 50% of Occidental Petroleum's shares. Since then, Buffett has continued to increase his holdings. In May last year, Buffett revealed that he was not seeking to acquire the company in its entirety, but Berkshire Hathaway might indeed buy more Occidental Petroleum shares, and the company usually prefers to buy them at a price below $60 per share.
It is worth noting that Buffett's latest holdings have also been exposed. The 13F document submitted by Berkshire Hathaway to the U.S. Securities and Exchange Commission on May 15th showed that the company sold 116 million shares of Apple in the first quarter. As of March 31st, Berkshire Hathaway held 789 million shares of Apple, currently worth about 155 billion U.S. dollars, accounting for 40% of the company's stock portfolio.
In addition, during the first quarter, Berkshire Hathaway also reduced its holdings of HP, Chevron, and Paramount Global. During the quarter, Berkshire Hathaway sold about 23 million shares of HP stock, completely clearing its position in HP. It also reduced its holdings of 3.11 million shares of Chevron stock and sold about 55.8 million shares of Paramount Global.
At the same time, the stock that Berkshire Hathaway has been keeping confidential before-Chubb-insurance was also revealed. Documents show that since the second half of 2023, Berkshire Hathaway has been building a large position in Chubb Insurance. As of the end of the first quarter of this year, Berkshire Hathaway holds a total of 25.92 million shares of Chubb Insurance, with a market value of $6.719 billion, making it the ninth largest heavy position of Berkshire Hathaway in U.S. stocks.
As of the end of the first quarter, Berkshire Hathaway's top ten heavy positions are Apple, Bank of America, American Express, Coca-Cola, Chevron, Occidental Petroleum, the Kraft Heinz, Moody's, Chubb Insurance and DaVita HealthCare.
At the 2024 annual shareholder meeting, Buffett said that he will still hold Apple, Coca-Cola and American Express for a long time, and these investments have achieved great success in the past. Although Apple's sales have recently declined, Apple is likely to still be Berkshire Hathaway's largest holding company. At the same time, he also hinted that selling Apple was to avoid much higher tax rates in the future, rather than a long-term judgment on its prospects.
The energy sector deserves attention.
Recently, BHE Renewable Energy Company (a subsidiary of BHE) joining forces with Occidental Petroleum to enter the lithium resources market has also attracted market attention. They have established a joint venture to extract high-purity lithium compounds from geothermal brine and carry out commercial production. Lithium is a key raw material for electric vehicles, consumer electronics, and grid energy storage batteries, and is known as "white oil." Previously, many oil and gas companies in the United States had invested in the lithium mining field.
BHE Energy Company has entered the utilities and energy sectors. In addition to renewable energy such as wind power, photovoltaics, hydropower, nuclear energy, and geothermal energy, it has also laid out traditional energy sources such as natural gas and coal power. The utility and energy sector is the second largest business sector of Berkshire Hathaway outside of insurance and railroads.
Haitong International pointed out that the energy sector is one of the important businesses of Berkshire Hathaway, a subsidiary of Buffett. While Berkshire Hathaway is laying out new energy, it still insists on investing in fossil energy and believes that it will take some time to completely switch to renewable resources. It also regards natural gas as an important transitional energy.
Starting from the low-oil-price in the Q4 2020, Berkshire Hathaway began to lay out Chevron and significantly increased its holdings of Chevron and Occidental Petroleum after Q1 2022, maintaining the fifth and sixth largest heavy positions respectively by the end of 2023. Buffett once stated that the company is bullish on Occidental Petroleum's abundance of oil and gas assets in the United States and its leading position in carbon capture. Buffett believes that oil and gas production is conducive to the U.S. energy independence, which is in the interests of shareholders and the country.
At the Berkshire Hathaway Shareholders Meeting held on May 4, when asked "Why does Berkshire Hathaway continue to invest in fossil energy in a place like Las Vegas, where solar energy is so good?", Chairman Buffett and Vice Chairman Abel stated that fossil energy is the oldest resource used for power generation and it still takes some time to switch from carbon resources to renewable resources. When using intermittent renewable resources such as solar and wind power, they are currently attempting to combine them with batteries, but cannot completely transform from carbon resources yet.
At the shareholders meeting, Buffett and Abel also expressed high recognition of the CEO of Occidental Petroleum and believed that investing in Occidental Petroleum is a good decision and may hold it for the long-term.
Editor/Lambor