Berkshire Hathaway Raises Occidental Stake, Ruling Out Takeover

Warren Buffett's Berkshire Hathaway had been on buying spree as the firm aggressively increased its stake in Occidental Petroleum in the last nine trading days. Regulatory filings unveiled that Berkshire's ownership in the oil and gas firm had increased to almost 29%, thus making it the largest institutional investor in Occidental.

Berkshire Hathaway, of Omaha, Nebraska, started purchasing last month on June 5 and has continued purchasing the shares almost daily in the firm at approximately $60. The conglomerate purchased another 7.3 million shares to bring the total stake in the business to over 255 million shares, or about 28.8 per cent of the business. This purchase catapulted Occidental into the sixth-biggest holding in the far-flung investment portfolio of Berkshire.

The relationship of Berkshire Hathaway with Occidental Petroleum does not stop at owning common stock in the firm. It also holds $10 billion of its preferred stock, hence making its financial relationship with the oil giant even more knotty. It also holds warrants for an additional 83.9 million common shares exercisable at $59.62 per share, part of a deal struck in 2019 to help finance Occidental Petroleum's acquisition of Anadarko Petroleum.

Now, exercising these warrants—"in the money" at $60.2, the recent price of Occidental shares—means Berkshire can do so at a profit. If Berkshire redeemed all its preferred stock in Occidental, it would own more than 40% of the company.

Even as ownership considerably surged, Warren Buffett has clarified that he would not be gunning for full control of Occidental. With the regulatory nod given to Berkshire for picking up 50% of the share capital in Occidental, which only recently gave way to speculative reports on possible takeover, Buffett seems focused on long-term investment rather than concerned about taking control of the company.