So the investment thesis on OXY is this:
OXY is betting huge on DAC.
This DAC bet is going to pay off after 2025.
Mr. Market does not see any need to invest now.
Meanwhile Q3 was $1.7B FCF. Market cap is $49B.
I think Warren is right on this one. I would be very surprised if Warren has not continued to buy more.
I am going to buy leaps $45 2026 and pay $16 today.
My guess is that the âmystery stockâ Warren is buying is OXY.
Irrespectively, I am accumulating OXY leaps.
Could it be OXY? They already own >25% of OXY!
OXY market cap is $51B. I can see WEB wanting to go much higher on this when much of the world is looking day to day at oil prices.
Thatâs not the question. I think Berkshire wants ALL of OXY.
My question is, once they already own 25%, can they still request âsecrecyâ when buying another percent or five?
I think No. They are deemed as insiders and has to file. But Berkshire in the past they were able to get exception to the âinsidersâ on many stocks.
The December 31 form 13F-HR states, âConfidential Treatment Requested. (The Manager has omitted from this public Form 13F one or more holding(s) for which it is requesting confidential treatment from the U.S. Securities and Exchange Commission pursuant to section 13(f) of the Exchange Act and rule 24b-2 thereunder)â [emphasis mine]. This means that the mystery stock is not listed on the 13F, so it cannot be OXY common stock.
From the annual report, Buffetâs view on Occidental is muddled. He bought 28% of OXY and his writing implies that he has little conviction but worth taking the bet âfor the countryâ.
On oil pricing:
"Under Vicki Hollubâs leadership, Occidental is doing the right things for both its country and its owners. No one knows what oil prices will do over the next month, year, or decade. But Vicki does know how to separate oil from rock, and thatâs an uncommon talent, valuable to her shareholders and to her country. "
On Carbon Capture (DAC)
*We particularly like its vast oil and gas holdings in the United States, as well as its leadership in carbon-capture initiatives, though the economic feasibility of this technique has yet to be proven. Both of these activities are very much in our countryâs interest.*emphasized text
You take a different slant than I do. To me, he does not sound muddled nor lacking in conviction. Heâs excited by the oil and gas, and the leadership and expertise at OXY. The carbon capture provides optionality. Heâs also sending a message to political leadership, regulators, and citizens when he mentions the country.
I think you are interested in DAC and skeptical about separating oil from rock, whereas Buffett is the exact opposite. So when Buffett says the economic feasibility of DAC is yet to be proven (which I would call the understatement of the day), you think he is muddled - why invest in OXY then? The answer, I think, is, as Labadal suggested, that for Buffett, DAC provides some optionality (I would say, it might allow OXY to milk the taxpayer for a bit more profit, and thatâs about it).
It doesnât sound muddled to me at all, it sounds like Buffett distinguishes very carefully between OXYâs DAC and its OIL activities. DAC is for brownie points and, to be generous, the wildcard that maybe the engineering might some day make sense, but traditional OIL (and gas) production, with huge cheap oil in the Bakken shale, in the context of constant oil demand and decreasing world oil production, is what is exciting to Buffett. This is not politics, this is economics, and if thereâs ever a conflict between the two, as a Berkshire investor Iâm confident that Buffett will go for the economics and somehow make the politics work for him, not the reverse.
Right. He however has been buying OXY relentlessly. I was expecting him to echo
a) what Vicki said: Starting 2025 Q2, oil prices will experience higher prices due to lack of investments in last decade increasing oil production
b) how OXY is better than others e.g. XOM
c) something else that others are not seeing
Maybe I am overanalyzing
Why? I think WEB is not going to predict Oil price or say any of the things you said. He made his bet, that speaks for itself.
He is mixing investment thesis with what is âgood for the countryâ. I think this is muddled thinking. He said similar stuff when he bought BNSF and Newspapers.
I think the two thoughts are separate in Buffettâs mind. The thesis is economic. And it so happens that itâs also good for the country.
I donât think itâs muddled at all, itâs simply part of his investing thesis - âNever bet against Americaâ.
The part about good for the country⌠he is not talking to you (shareholder), but talking to regulators. See my post on annual report.