Berkshire boat bought a load of OXY common stock last week at average prices ranging from $47.62/share to $58.45/share.
Note: Berkshire also own 84 million warrants to purchase OXY at $59.62.
Question: With the the common currently trading at ~ $53/share, is he currently:
If he continues to buy, we should find out soon enough.
0 voters
It seems likely that, if he was a buyer last Wednesday through Friday, he would again be a buyer today at lower prices.
I can’t picture him changing his mind about the attractiveness of the stock since then.
And when he sees something he likes, he does generally like to buy a lot of it.
Jim
<<I can’t picture him changing his mind about the attractiveness of the stock since then.
And when he sees something he likes, he does generally like to buy a lot of it>>
I am certain that when Morgan Stanley lowered their opinion of OXY to
neutral due to “valuation concerns” WEB immediately ceased his buying.
As the kids say Yeah, Right! 
For the life of me, I can’t accurately value this company.
I guess I’m an OXY moron.
Professor Talon
He’s still buying as of today.
Congrats to the 18 in the poll who thought he still would:
He’s still buying as of today. …
I’ve lost track…how much do we own now?
There are the 83.9m warrants, which in this context is the simple part because it’s constant.
But for the common stock we were in, then out, then in again, then adding lately…is that right?
The dataroma site lists purchases of 106.5m this month, but some other articles mention another 30m I can’t spot the date on.
They’re not on the year-end 13f, so probably February?
So, 83.9 warrants plus 136.4m common now?
Though it’s not a reason to be buying a bigger position now, it’s easy to picture one part of Mr Buffett’s brain saying:
Why exercise warrants if I can buy the stock on the open market for less than the conversion price?
Shares outstanding 934m for now.
If the warrants are ultimately exercised, that count rises to 304.2m and BRK’s position rises to 220.3m shares or 23.6% of the company.
Occidental gets $5bn in cash from Berkshire, but Berkshire ends up still indirectly owning $1.18bn of that.
Maybe somebody who has been following this more closely can tell me if I got any of that wrong.
Seems like a pretty high conviction move.
Are many people coat-tailing?
Jim
Poll Update: Noticed that 4 lurkers (you know who you are!) went back to the poll and retroactively voted that Buffett would buy more OXY shares after the recent update Wednesday showing he had in fact bought an additional $billion worth. That’s not fair. You should be ashamed of yourselves.
Mungo had asked if anybody was coat tailing Buffett on the OXY purchases. I bought a small amount in an IRA this morning @ $56.80. Buffett has recently paid as high as $58.45/share (average). Of course, the 84 million warrants exercise at $59.62. No reason to believe he has stopped his buying. If he were to buy out the firm, he would likely throw in an even higher bid on any remaining shares to sweeten the pot.
We know Warren and Charlie claim they don’t do macro, but given some of their comments recently, on the potential for rising inflation and how valuable and irreplaceable oil and gas are to our society, am wondering if the recent Ukraine war situation played a role in Warren “suddenly” going “bullish” on OXY overnight after listening their recent earnings call.
Perhaps Warren and Charlie are thinking along the same lines as Lynn Alden here:
The Russian Impact on Commodities
"The global economy, in a blank-sheet-of-paper naïve design that disregards the complicating factors of geopolitics, basically says this: we’ll take Chinese labor and logistics infrastructure, Russian and Brazilian commodities, and developed market institutions and capital, and combine them (and resources from similar countries across the spectrum) into full products and services across the world.
Under this operating framework, we don’t need to build secondary manufacturing and shipping facilities, because we assume the ones we have in China will always be available. We don’t need to build secondary nickel mines for our EV batteries, because we assume the ones in Russia will be open and able to supply the world. Chile can supply our copper, Brazil can supply our soybeans, Russia and Ukraine can supply our wheat, Taiwan can supply our semiconductors, China can supply our labor, and there’s no issue here.
All good, right? For decades yes, until it’s not.
Russia is one of the biggest oil and gas exporters in the world. They’re also one of the biggest exporters of wheat, nickel, fertilizer, platinum group metals, enriched uranium, coal, aluminum, and more. It’s challenging for the global economy to function without those mines, in the event of sanctions. And in most cases, it takes several years to discover and build a new mine, in what is an otherwise tightly-balanced global supply/demand system.
Going forward, any back-tests about inflation or disinflation that only go back twenty or thirty years are practically useless. This whole 1980s-through-2010s disinflationary period (with one substantial cyclical inflationary burst in the 2000s) was during a backdrop of structurally falling interest rates and increasing globalization, with the sacrifice of resiliency for more efficiency.
The world is now looking at the need to duplicate many parts of the supply chain, find and develop potentially redundant sources of commodities, hold higher inventories of everything, and in general boost resilience at the cost of efficiency."
I coat-tailed. I bought a 2% position over several days at an average of $53.91. So far so good.
We know Warren and Charlie claim they don’t do macro, but given some of their comments recently, on the potential for rising inflation and how valuable and irreplaceable oil and gas are to our society, am wondering if the recent Ukraine war situation played a role in Warren “suddenly” going “bullish” on OXY overnight after listening their recent earnings call.
OXY shares have an additional value to you and me that they don’t have to Buffett: he might be intending to buy them out at $70 a share. If so, then his modus operandi is very often to buy about 20% of the company on the stock market, and then offer a 15-20% premium for the rest.
Of course, he has built up very big stakes in other companies (Phillips 66 for instance, or DaVita) without buying the whole firm, but there are numerous examples (BNSF, Precision Castparts, etc.) If he buys Occidental, it will probably be soon, since he is already close to 20%. It may be worth a small investment based on the small probability (10%?) that Buffett ends up giving us a 20% return in a month or two.
But is that already priced in? Looking at the chart, and the known fact that Buffett began his purchases on Feb 28, when the shares were in the low 40s, and announced the purchase when the shares were in the mid-50s, where they have stayed since then. Shares are up about 40% since the beginning of the horrifying Russian invasion of Ukraine, whereas most of the other oil majors are up only a few percent (of course, the companies with major activities in Russia, like BP, Shell and Exxon, are flat or down.)
So it may be that a combination of Buffett’s frenetic purchases, plus the coat-tailers hoping for a quick premium, have driven the price up from about $40 to $55 already. What may very well happen now is that Buffett was prepared to pay 25% more than the undisturbed $40 price, i.e. say $55, but not a premium on top of that premium. So if he does ever make a buyout offer, it could well be only if the shares have drifted back closer to the low 40s where they started, as the excitement of the possible takeover wears off and the coat-tailers lose hope. So if a takeover offer comes, it might be at roughly today’s prices, leading me to reluctantly conclude that the possible Berkshire takeover of Occidental is already priced in…
dtb
From what I recall, Oxy stocked had already eclipsed $55 before the Friday evening announcement that Buffet had been buying. It seems that Buffet was only able to buy less than half of his shares in the $40’s. Assuming Buffet does not plan to buy the whole company at this time, which I assume is the case considering he updated the CEO first after his purchases. Then if Buffet is buying this fast and furious in a public way, I assume he must think the company is worth well north of $55. I don’t think he would be so aggressive and public if he did not think there was a material amount of return potential available from the action. As Munger says, he is always learning and this is new. Of course, the potential outcomes are based on a volatile commodity. So one question is, at what oil price would be necessary to make a 15% annual return off of Oxy? At $40 Oxy claims they can pay their debt and dividend now. Clearly if the price of oil is elevated for 12 months or more, Oxy’s balance sheet will improve dramatically. 3 years of elevated oil and they could pay off almost all of their debt at this rate. We will see in Q1 how much cashflow improves with the hedges removed.
My estimate is that they may be able to earn $8+ this year. We will see how long that lasts.
“Assuming Buffet does not plan to buy the whole company at this time, which I assume is the case considering he updated the CEO first after his purchases. Then if Buffet is buying this fast and furious in a public way, I assume he must think the company is worth well north of $55. I don’t think he would be so aggressive and public if he did not think there was a material amount of return potential available from the action.”
Agree! I see us remaining only a large investee, but with a sizable drop in Mr. Market’s price, WEB could easily pull another BNSF when it dropped after the GFC. My gut says we will not acquire but it will be very interesting. I recall after the CVX purchase, we sold a sizable portion after a 50% or so run up. Feels like we will hold long term, but just never know with WEB. So cool to finally see he and CTM very excited about a new equity position!
Imagine the headline “super billionaire buying Oil company” Senator Warren will have field day, she will say all the high oil price, profits goes to billionaire pocket. They are not investing in the company, cutting down cap-ex, driving higher oil price, etc.
Will there be couple of congressional hearings? Keep in mind, Republicans hate WEB for his support of Hillary.
So, this will be a great political theater. I am pretty sure WEB understands this. I don’t think Berky is looking into invest in an industry whose economics are pretty wild and decided by what Saudi and Russian’s do.