Warren Buffett can’t seem to get enough of Occidental Petroleum (NYSE:OXY) stock.
The legendary investor and chief executive of holding company Berkshire Hathaway (NYSE:BRK.B) has bought an additional 9.6 million shares of OXY stock, brining his ownership of the Houston, Texas-based oil giant to 16.3%. Regulatory filings show that Buffett boosted his position in Occidental Petroleum over the past week as the share price fell nearly 10% and came off its high for the year. Despite the recent decline, Occidental Petroleum’s stock remains up 98% this year at $57.44 per share.
What Happened
Berkshire Hathaway spent a total of $529 million scooping up additional shares of OXY stock over the last week, bringing Buffett’s total investment in Occidental Petroleum this year to $8.52 billion. Berkshire Hathaway now owns 152.7 million shares of Occidental Petroleum, which explores, extracts and refines crude oil.
Following its purchases over the past week, Berkshire is now the largest individual shareholder of Occidental Petroleum. The company has options to buy an additional 83.9 million shares of the company, which would increase its stake in OXY stock to more than 25%. Buffett said earlier this year that he is keen to capitalize on elevated oil prices following Russia’s invasion of Ukraine and as global supplies remain tight coming out of the pandemic.
Why It Matters
Warren Buffett is taking advantage of the fact that OXY stock is down over 25% since hitting a 52-week high of $74.04 in late May. The share price has come down in recent weeks as President Biden has criticized the profits of oil companies and is actively taking steps to lower prices at the gas pumps, including asking Congress to approve a gas tax holiday through September.
However, Occidental Petroleum is not the only oil company whose shares Buffett is snapping up this year. The Oracle of Omaha has also been buying large quantities of Chevron (NYSE:CVX) stock. During this year’s first quarter, Berkshire Hathaway spent $51.1 billion buying stocks, including increasing its stake in Chevron by $25.9 billion. Buffett appears to be betting that prices for crude oil, which currently sit at $106 a barrel in the U.S., will remain elevated for the foreseeable future.
What’s Next for OXY Stock
News that Warren Buffett has increased his stake in Occidental Petroleum has OXY stock up nearly 5% today. Clearly, investors see Buffett purchasing shares as a vote of confidence in the oil giant. However, oil prices remain volatile, especially with the ongoing war in Ukraine. Governments around the world are starting to take action to bring prices down at the gas pumps and alleviate the pain consumers are experiencing. As such, investors should expect that the stocks of oil companies will continue to rise and fall in coming months.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
