Oxy Shares Fall Below Key Level
Shares of U.S. oil producer Occidental Petroleum (NYSE:OXY) dropped to $56.17 on Tuesday, falling below a critical price level that has historically prompted significant purchases by its largest investor, Warren Buffett’s Berkshire Hathaway. This level, often referred to as “the Berkshire put,” has previously set a price floor for the oil firm’s stock.
OXY shares have been trading below $60 for the entire month, marking the longest period under this threshold since January, when Berkshire Hathaway acquired 4.3 million shares in early February. The lack of recent purchases may indicate that Buffett, who holds nearly a 30% stake in Occidental, has decided not to increase his position further at this time. Berkshire Hathaway, with a stake valued at $16.1 billion, is the largest shareholder of Occidental and has U.S. regulatory approval to acquire up to 50% of the company.
Investment Patterns and Market Pressures
OXY shares have decreased by 12.3% over the past year, contrasting with the stable performance of the XLE fund, which tracks the overall energy sector. The decline is partly due to CrownRock LP investors filing to sell 29.6 million Occidental shares, a result of Occidental’s $12 billion acquisition of the Midland, Texas-based oil producer.
Historically, Berkshire Hathaway has made large purchases when Occidental shares fell below $60. For instance, in June, Berkshire acquired 2.56 million shares at prices ranging from $59.86 to $59.75 each. Additionally, the firm purchased nearly $590 million in Occidental shares last December when the stock price dropped due to the debt associated with the CrownRock deal. This pattern of significant acquisitions has been observed since fall 2022, with Berkshire buying shares between $57.91 and $61.38.
Berkshire Hathaway also holds warrants to buy 83.5 million shares of Occidental at $59.62 per share, along with preferred stock in the company.
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