Berkshire Hathaway (BRK-A), a major holder of Occidental Petroleum (OXY), recently added 3.92 million shares. The buy cost the company $246 million, and represented a 2 percent increase in Berkshire’s OXY holdings.
The buy comes after a four-month pause, as Berkshire’s prior buy was back in June. Berkshire has been the sole insider buyer of shares going back to early 2022. And 2022 also saw the last insider sale, which came following the exercise of a stock option.
Overall, Occidental insiders own about 0.3 percent of shares, and Berkshire owns about 27 percent of the company. Berkshire has regulatory approval to buy up to 50 percent of Occidental.
Thanks to the recent selloff in oil, shares are down 16 percent over the past year, well underperforming the S&P 500.
But strong demand for oil and tight supplies should keep prices high, which in turn should keep oil stocks strong performers.
Action to take: Investors may like shares here, as the stock looks ready to trend higher in the months ahead.
At current prices, shares yield just 1.2 percent, so income-oriented investors may want to look at other major oil stocks for a higher payout.
For traders, the January 2024 $65 calls, last going for about $2.40, could see mid-double-digit returns in the coming weeks as shares come off of oversold conditions in the short-term.
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 of the companies mentioned in this article.