Warren Buffett, CEO of Berkshire Hathaway, speaks to the press as he arrives at the 2019 annual shareholders meeting in Omaha, Nebraska, May 4, 2019.
Johannes Eisele/AFP/Getty Images
has purchased nearly 30 million shares of
since the end of 2021, adding to an existing large holding of 83.9 million warrants in the big energy company.
In a filing late Friday,
Berkshire (ticker BRK/A, BRK/B) said it holds a total of 113.7 million shares of Occidental (OXY), including both the stock and warrants. The combined holding represents 11.2% of Occidental’s outstanding shares but that overstates Berkshire’s investment since the warrant exercise price is out of the money, or above the current stock price.
Occidental stock has surged lately, outpacing a strong energy group. The shares gained 17.6% Friday to $56.15 and have nearly doubled so far in 2022.
Berkshire got the warrants as an equity “kicker” when it invested $10 billion in Occidental preferred stock paying a lush 8% dividend yield in April 2019 when Occidental was raising money to fund its $50 billion-plus offer for Anadarko Petroleum and win a bidding war against the larger
Those warrants have eight years until maturity and have an exercise price of $59.62. The warrants are close to being in the money now after being way out of the money in 2020 when Occidental’s stock plunged below $10. Warrants are long-term call options that give the holder the right to purchase a stock at a fixed price for a set period of time. Berkshire’s warrants aren’t publicly traded but could be worth $15 each or more if they were.
Berkshire’s Occidental stock purchases have come since the start of this year and could be a factor in the stock’s gain so far in 2022.
The new equity stake of 29.8 million shares, now valued at $1.7 billion, could have been initiated by CEO
who oversees Berkshire’s $350 billion equity portfolio, or one of his two investment lieutenants, Todd Combs and Ted Weschler, who run about 10% of the portfolio.
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