Icahn Vs. Buffett: Two Sides Of An Occidental Petroleum Trade

It is not very often, that two titans of the investment world — Warren Buffett and Carl Icahn — are on opposite sides of a trade.

It's occurred for the second time since 2016. Over the last few days, both revealed making opposing moves in SEC filings in Occidental Petroleum OXY, which is similar to what occurred in May 2016 with none other than Apple Inc. AAPL.

Round 1: Back on Monday, May 16, 2016, Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) announced that it took roughly a $1-billion stake in shares of Apple Inc. AAPL. In typical Buffett fashion, after making its split-adjusted all-time high in December 2015, the issue had a significant decline of 22% when it ended April at $23.44.

During that extended decline, Buffett was attempting to “buy the dip” and has added to his stake several times over the last few years. With the issue now trading at $162 and being his largest holding, he made the right decision.

Interestingly, that news came after Icahn Enterprises LP IEP announced it had removed the issue from its portfolio. It should be noted that other well-known hedge fund managers have done the exact same thing: "selling the dip."

Round 2: On Friday, SEC filings from Berkshire Hathaway revealed Buffett has taken a sizable new position in the oil and gas giant.

On Monday, longtime activist investor Icahn revealed to the Occidental board that he has sold his remaining stake in the company.

Icahn cited Occidental’s ill-timed $38-billion buyout of Anadarko Petroleum in May 2019 as the reason for his exit. Interestingly, that is when Buffett took his first stake in Occidental by acquiring $10 billion in preferred stock and warrants to buy about 84 million in common stock as part of Occidental's fundraising process. Icahn was critical of the terms surrounding the Buffett investment when it took place.

What's Different: Icahn’s exit of Occidental was selling into strength — into a rising market — as opposed to selling into weakness, which occurred during his exit of Apple.

In the case of Buffett, who usually accumulates into weakness, his purchase was in a rapidly rising issue that is at a 34-month high with oil at a 13-year high.

Buffett Vs. Icahn Since May 2016: At this time, it is impossible to determine who made a better move in shares of Occidental Petroleum. It is very easy to determine whose investment style has prospered since the end of May 2016.

While Buffett’s Class B shares have appreciated 130% ($140.50 to $323), Icahn Enterprises is slightly in the red ($54.32 vs. $53.60).