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Berkshire Hathaway has raised its stake in Occidental Petroleum to over 25% after yet another share purchase of 2.14 million shares, Reuters has reported, citing a regulatory filing.
The latest buy cost Berkshire $122.1 million.
Barron’s noted that after this latest purchase, Warren Buffett’s investment company owns a stake in Occidental worth $12.9 billion, based on Oxy’s closing price yesterday.
Berkshire Hathaway began buying stock in Occidental last year, sparking speculation that it was going to take over the company, which it helped acquire rival Anadarko in 2019.
Buffett denied he had such plans at Berkshire’s annual shareholders' meeting earlier this year.
“We don’t know where the price of oil will be, but we like Occidental’s position in the Permian,” Buffett told Berkshire Hathaway’s shareholders at the company’s annual meeting in early May.
“There’s speculation about us buying control, we’re not going to buy control,” Buffett added. “We wouldn’t know what to do with it.”
Three years ago, Berkshire Hathaway funded Oxy’s takeover of Anadarko with $10 billion in the form of equity. It was as part of this deal that the investment firm received the stock purchase warrants that could see it acquire 20% or more in Occidental.
To date, Berkshire is Oxy’s largest shareholder. Besides the purchase warrants, the company owns $10 billion worth of Oxy preferred stock, which carries an 8% dividend.
Occidental has recently started buying the preferred shares, and the latest filing by Berkshire also included information on those, saying Occidental had redeemed about $160 million worth of those shares at a price that represented a 10% premium to the original.
Following the redemption and several earlier ones this year, Berkshire’s stake in Occidental preferred stock is worth $9.2 billion. The investment company also owns warrants to buy more Oxy stock at preferential prices of less than $60 per share.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com