Will Buffett step in to keep Occidental afloat?

Shares of Occidental Petroleum fell below $56, raising questions about whether Warren Buffett’s Berkshire Hathaway will step in as it has done in the past.

Berkshire Hathaway, Occidental’s largest shareholder with nearly 30 percent of the stock, previously bought millions of shares whenever Occidental’s price fell below $60, a pattern analysts have dubbed the “Berkshire well.” But this time, the absence of such acquisitions is raising eyebrows.

Over the past month, Occidental has traded below $60, its longest stretch since January, when a similar decline prompted Berkshire to buy 4.3 million shares. Despite this, Berkshire has remained on the sidelines, leading some to speculate that Buffett may be satisfied with his current holdings. With regulatory approval to acquire up to 50% of Occidental, the door is open for future acquisitions, but the current pause could suggest a potential change in strategy.

Occidental’s shares have fallen 12.3% over the past year, in contrast to the erratic performance of the broader energy sector. The pressure intensified after CrownRock LP investors requested to sell 29.6 million shares they acquired through Occidental’s $12 billion purchase of the Texas oil producer.

Historically, Buffett’s buying sprees have supported Occidental shares, but the current lull could signal a different approach. In addition to the common stock, Berkshire holds warrants to purchase 83.5 million shares at $59.62 each and holds preferred stock in the company, indicating a long-term commitment. However, the market is watching closely to see if the Oracle of Omaha will continue to support Occidental’s stock or if Berkshire has hit its limit.

By Julianne Geiger for Oilprice.com

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