Buffett and OXY. What’s he up to?

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    • #6234
      AvatarNeodymium60
      Participant

      Buffet bought another 10 million shares of Occidental Petroleum (I own little schnitzel) at the close last night.  He’s all in on energy in his portfolio and most seems to be carbon based.   This flies in the face of conventional wisdom and he usually has a long time horizon.  Anyone have any thoughts as to what he’s thinking?

      https://www.kiplinger.com/investing/stocks/604852/could-buffett-buy-out-occidental-petroleum-oxy

    • #6235
      rjnwmillrjnwmill
      Participant

      “Conventional wisdom” or the conventional narrative?  Personally, I think the “transition” is a much longer slog than suggested by global greens. There is no near/medium term upside. Supply shortages are bringing coal fired plants back on line in Germany. (China & India are going towards clean Russian natural gas with Europe going coal?). And energy prices generally are advancing. No reason that will stop in a supply constrained world.   If we see blackouts in this country over the summer…if we see continuing failure resulting from the Biden agenda generally…there will be a significant policy realignment in 2024. Energy policy will be refocused on fossil fuels and there will be no market for the failed green deal agenda. The old saying, “fool me once”…

      Here's a toast with one last pour, may it last forever and a minute more;
      Good fortune seems to you have sung, to live and love way past long

    • #6236
      AvatarNeodymium60
      Participant

      Agree with most of what you say.  But Buffett does not play his hand holding a pair of deuces against the backdrop of current energy policy. It just doesn’t make sense.   And there are 2 1/2 years left for Biden and Kamala who.

      1.  Biden’s energy advisors want more ethanol.  More corn. But no fertilizer.
      2. They are at war with refineries and want to get rid of them.
      3. They want a carbon tax on everything starting at $900/ton in 2023 and $1500/ton in 2025.  Huge price increases across the board.

      Everything suggests less supply and higher prices for energy as a matter of energy policy.  Where’s the sweet spot for buying Chevron and Occidental against this backdrop?   It also bothers me that Buffett is so close to Gates who, by the way, is buying big tracts of farmland everywhere.

       

       

       

       

      • This reply was modified 1 month, 2 weeks ago by AvatarNeodymium60.
    • #6290
      rjnwmillrjnwmill
      Participant

      Neo, I saw this and thought of you. It offers a plausible thesis for Buffet’s OXY investment.

      I’d appreciate your thoughts.

      https://haymaker.substack.com/p/making-hay-monday-july-18th-2022

      Here's a toast with one last pour, may it last forever and a minute more;
      Good fortune seems to you have sung, to live and love way past long

    • #6293
      AvatarNeodymium60
      Participant

      He bought another 2 million shares in the last 3 trading days.  There are now about 180 million shares in the Berkshire portfolio and an additional 84 million warrants (in the money at 59.62), plus 10 billion of 8% preferred shares in the BRK.B portfolio.  He now owns about 1/3 of OXY.  Vanguard owns about 11%.  He probably can acquire the rest of OXY at around $80 according to CNBC.

      He seems to love that oil patch now.   If you own more than 20% of a company you are eligible to get a part of the free cash beyond the dividend.   He’s thinking of his shareholders.

      I don’t know what he’s up to but I think a lot of sellers must have second thoughts now that he is all in.  He’s now got a big piece of Chevron too.  Other than Apple, he must think that energy is the best place to be in the market right now and he clearly knows something we don’t.  It’s fun to watch him operate and I’m holding.

      Edit previous price target. Analysts raising price target today closer to 100.

      • This reply was modified 3 weeks, 4 days ago by AvatarNeodymium60.
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