His Berkshire Hathaway on Friday won approval to buy as much as 50 per cent of the shares. Some investors believe it’s a step toward a full takeover, which may end up costing more than $US50 billion .Here’s why Occidental is attractive to Berkshire:Inflation looks to be the megatrend for the first half of the 2020s, and crude oil is one of the best natural hedges out there.
“People that are on the extremes of both sides are a little nuts,” he said at a Berkshire shareholder meeting in 2021.Buffett first invested in Occidental in 2019 when the oil company was in a bidding war with Chevron to buy its crosstown Houston rival, Anadarko.Occidental chief executive Vicki Hollub flew to Omaha, Nebraska, on the company’s Gulfstream V and convinced Buffett to add $US10 billion to her war chest.
But on the flip side, this created a good value play for Buffett. When crude turned around late last year and was supercharged by Russia’s invasion of Ukraine, Occidental was best-placed to benefit.P 500 this year, up more than 140 per cent compared with the index’s 11 per cent decline. Occidental would work better as a subsidiary of Berkshire than a stock holding “given the volatility that exists in the energy/commodity markets,” Warren said.“This could end up, though, evolving into a slow-motion takeover where Berkshire buys up to the stakes that FERC allows it to acquire until it can acquire Oxy whole.
This year, the veteran investor praised Hollub after reading a transcript of Occidental’s February 25 earnings conference call in which she pledged financial discipline even as oil prices were rising.