Berkshire Hathaway (BRK-B), a major holder of Occidental Petroleum (OXY), has continued to add to its stake with a 763,017 share buy. The most recent buy increased Berkshire’s position by less than 1%, and came to a total cost of $35,724,074.
This is Berkshire’s first buy of the year, but the holding company last bought Occidental back in December, paying just over $409 million for almost 8.9 million shares. Berkshire has been the only insider to buy over the past two years.
Overall, Occidental insiders own 28.6% of shares, and institutions own a further 51.7% of shares.
The oil and gas exploration company is down 15% over the past year, thanks to low energy prices and lackluster demand. That’s about in-line with Occidental’s 17% decline in earnings growth last year, even as overall revenues held steady.
On the valuation front, Occidental trades at about 13 times current and forward earnings, a reasonable valuation for an oil major.
Action to take: Shares may be in a bottoming process, having bounced twice now after getting to the $45 range. If so, value investors may like shares here as a rebound play. Occidental currently pays a 1.8% dividend at today’s prices.
For traders, the April $50 calls, last trading for about $1.93, could see mid-to-high double-digit returns if Occidental shares continue to bounce higher in the weeks ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
