Warren Buffett, the Oracle of Omaha, continues to solidify his reputation as one of the greatest investors of all time. Since taking the helm at Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) in the mid-1960s, Buffett has generated cumulative returns exceeding 4.3 million percent, dwarfing the S&P 500’s 31,000% over the same period. His investment moves, therefore, attract significant attention, and last week was no exception.
A Rare Real-Time Glimpse into Buffett’s Trades
Typically, investors only get a delayed view of Buffett’s transactions through Berkshire Hathaway’s quarterly 13-F filings with the Securities and Exchange Commission (SEC). These filings reveal trades that can be up to 90 days old, giving Buffett the advantage of accumulating shares without market interference. For instance, his secret accumulation of Chubb (NYSE: CB) shares in 2022 only became public in the first quarter of 2023, leading to an 8% jump in Chubb’s stock price after the disclosure.
However, last week offered a rare opportunity to see Buffett’s trades in near real-time. As a holder of more than 10% of Occidental Petroleum (NYSE: OXY), Buffett is considered an insider and is required to file a Form 4 with the SEC whenever he buys or sells shares. This transparency allowed investors to witness Buffett’s purchase of Occidental stock five times over three days.
Buffett’s Latest Investment in Occidental Petroleum
Buffett’s Form 4 filing revealed that he bought nearly 8.9 million shares of Occidental Petroleum last week:
- Tuesday: Purchased 2.5 million shares
- Wednesday: Made two purchases totaling 2.8 million shares
- Thursday: Bought 3.6 million shares in two transactions
These purchases bring Buffett’s total holdings in Occidental to 264.2 million shares, valued at $12.45 billion. The average price paid for these shares ranged between $45.50 and $46.92 per share—the lowest levels since 2022, when Buffett began accumulating Occidental shares in earnest. Occidental is now the sixth-largest holding in Berkshire Hathaway’s portfolio.
Why Occidental Petroleum?
Occidental Petroleum is a premier independent oil and gas producer, particularly active in the Permian Basin, a critical U.S. fossil fuel production region. Despite its strengths, Occidental’s stock has faced challenges, with its price down nearly 22% over the past year. This decline reflects broader trends in the energy sector, including a 5.5% drop in West Texas Intermediate (WTI) crude prices and a 7.4% decline in Brent crude prices over the same period.
However, Occidental has been actively strengthening its financial position, making it a compelling long-term investment. Buffett’s average purchase price for Occidental shares is around $54 per share, meaning current prices offer a unique opportunity for investors to buy at a discount compared to the Oracle’s own investments.
The Bigger Picture
Oil prices are cyclical, and Occidental’s fortunes are closely tied to these fluctuations. While global demand for oil is expected to weaken in the short term, President-elect Donald Trump’s promise to promote domestic energy production could benefit companies like Occidental. As the largest independent producer in the Permian Basin, Occidental is well-positioned to capitalize on any favorable policy shifts.
Should You Follow Buffett’s Lead?
Buffett’s rapid accumulation of Occidental shares underscores his confidence in the company’s long-term potential. While short-term challenges persist, including potential weakness in oil prices, Occidental’s strong fundamentals and strategic positioning make it an attractive investment for those with a long-term perspective.
Investors now have a chance to buy a stock Buffett owns at a price lower than he paid. As always, careful consideration of individual financial goals and market conditions is essential before making any investment decision.