Shares of Occidental Petroleum have fallen below $56, leading to speculation about whether Warren Buffett’s Berkshire Hathaway will intervene, as it has in the past.
Berkshire Hathaway, which holds nearly 30% of Occidental’s shares, has historically bought up millions of shares when Occidental’s stock price fell below $60. Analysts have referred to this strategy as “the Berkshire put.” However, this time, Berkshire has not made any such purchases, raising questions.
For the past month, Occidental’s stock has remained below $60, marking the longest period since January. In January, Berkshire bought 4.3 million shares when the price dropped. The current absence of similar buying activity from Berkshire suggests that Buffett might be content with his current investment. While Berkshire has regulatory approval to acquire up to 50% of Occidental, the lack of recent purchases could indicate a shift in strategy.
Occidental’s stock has decreased by 12.3% over the past year, while the broader energy sector has shown flat performance. The decline has been exacerbated by CrownRock LP’s plan to sell 29.6 million shares, which were part of Occidental’s $12 billion acquisition of the Texas-based oil producer.
Buffett’s previous buying sprees have often boosted Occidental’s stock, but the current pause might hint at a change in approach. Berkshire not only holds common shares but also warrants for 83.5 million shares at $59.62 each and preferred stock in Occidental. This indicates a long-term commitment, but market observers are keen to see whether Buffett will continue to support Occidental’s stock or if the Berkshire put has reached its limit.