Warren Buffett’s Berkshire Hathaway has recently increased its ownership stake in Occidental Petroleum, acquiring an additional 2.1 million shares. With Berkshire’s ownership now exceeding 25%, analysts are predicting a 20.12% upside for Occidental, with a consensus price target of $70.29. Occidental presents an attractive investment opportunity due to its appealing valuation, strong management team, and potential growth in the oil and gas sector.
Key Points
1. Berkshire Hathaway has acquired an additional 2.1 million shares of Occidental Petroleum, increasing its ownership stake to over 25%.
2. Analysts predict a 20.12% upside for Occidental Petroleum, with a consensus price target of $70.29.
3. Occidental presents a compelling investment opportunity with an appealing valuation, strong management, and potential growth in the oil and gas sector.
Warren Buffett’s Berkshire Hathaway has increased its ownership in Occidental Petroleum, acquiring an additional 2.1 million shares. This brings Berkshire’s total ownership to over 25% of the oil company. The purchase was made between June 26 and June 28 for around $122.1 million. Berkshire initially became involved with Occidental three years ago when it funded the company’s takeover of Anadarko with $10 billion in equity. Berkshire has been steadily increasing its stake in Occidental since then.
At Berkshire’s annual meeting in May, Buffett praised Occidental and its management, stating that they had no plans to take control of the company. Buffett emphasized his confidence in the management team, saying, “We’ve got the right management running it.” With this recent acquisition, Berkshire firmly establishes itself as the largest shareholder of Occidental, surpassing State Street Corp.
Analysts covering Occidental expect the stock to see a significant upside. The consensus price target for the stock is $70.29, indicating a 20.12% increase. Of the 21 analysts covering Occidental, eight rate it as a Buy, ten rate it as a Hold, two rate it as a Sell, and one rates it as a Strong Buy. Stephens recently initiated coverage of Occidental with a price target of $72 and an Overweight rating.
Since Buffett began buying Occidental shares in March 2022, the stock has risen by over 53%. However, year-to-date, the stock is down 6.49%, while the broader market, represented by the SPDR S&P 500 ETF Trust, has gained 14.56%. Despite short-term fluctuations, Buffett’s investment strategy focuses on longer time frames.
While investors should conduct their own research before investing, Occidental presents a compelling opportunity. Buffett’s positive assessment of the management team is an important factor to consider. Additionally, the company’s valuation is appealing, with a forward price-to-earnings ratio of around 12.09. The oil and gas sector is expected to experience growth in the coming years, which presents an opportunity for Occidental. The company has made significant investments in carbon capture and sequestration, with a focus on direct air capture facilities.
Buffett’s continued interest in Occidental demonstrates his favorable view of the stock and adds to Berkshire’s already significant position. However, investors should make their own informed decisions and not simply follow Buffett’s investment moves.
This article provides an overview of Berkshire Hathaway’s increased ownership in Occidental Petroleum and the reasons why Occidental presents a compelling investment opportunity. It also highlights analysts’ predictions for the stock’s upside and the performance of Occidental shares since Buffett began buying them.
