Shares of Occidental Petroleum have dropped below $56, raising questions about whether Warren Buffett's Berkshire Hathaway will step in as it has in the past.
Berkshire Hathaway, Occidental's largest shareholder with nearly a 30% stake, has previously purchased millions of shares whenever Occidental's price dipped below $60, a pattern that analysts have dubbed "the Berkshire put." But this time, the absence of such purchases is raising eyebrows.
For the past month, Occidental has traded under $60, the longest stretch since January, when a similar dip prompted Berkshire to buy 4.3 million shares. Despite this, Berkshire has remained on the sidelines, leading some to speculate that Buffett may be satisfied with his current holdings. With regulatory approval to acquire up to 50% of Occidental, the door is open for future purchases, but the current pause could suggest a potential shift in strategy.
Occidental's stock is down 12.3% over the last year, contrasting with the flat performance of the broader energy sector. The pressure intensified after CrownRock LP investors filed to sell 29.6 million shares that they acquired through Occidental's $12 billion purchase of the Texas-based oil producer.
Historically, Buffett's buying sprees have buoyed Occidental's stock, but the current lull could signal a different approach. In addition to common shares, Berkshire holds warrants to purchase 83.5 million shares at $59.62 each and owns preferred stock in the company, indicating a long-term commitment. However, the market is watching closely to see if the Oracle of Omaha will continue to prop up Occidental's stock, or if the Berkshire put has reached its limit.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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