Berkshire Hathaway (BRK-B), a major holder of
Occidental Petroleum (OXY), recently increased their stake by nearly 30 percent with a 27,107,389 share buy, coming in at just over $1.5 billion.
That’s on top of a 61 million share buy earlier in March at a cost of over $3.1 billion, also from the conglomerate managed by Warren Buffett. A number of company directors have been active in the past few weeks, with buys exceeding sales there.
Company insiders at the major oil company own about 0.2 percent of shares, with big institutions owning over 75 percent of the stock.
Occidental has surged 88 percent in the past year thanks to robust energy prices, but has pulled back in recent sessions thanks to oil’s drop under $100 per barrel. However, oil prices are likely to stay strong over the medium term, so shares look poised to head higher again.
Action to take: Investors may like shares here, although the stock is a bit expensive relative to the sector at 15 times forward earnings.
The company has greatly increased its dividend in the past year, but the stock still yields just under 1 percent. Nevertheless, it’s well poised for the current geopolitical picture, so there’s room for both share price appreciation and dividend growth.
For traders, the July $60 calls, last going for about $4.25, should deliver mid-to-high double-digit returns in the coming weeks as oil prices start to trend higher again.
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.
