Warren Buffett $13B Bet On Occidental Petroleum Turns Sour As Shares Plunge 29% Since Mid-April — Analyst Says He Could Buy More

Shares of Occidental Petroleum OXY have plummeted 29% since mid-April, impacting Warren Buffett‘s substantial investment in the company.

What Happened: Chris Bloomstran, fund manager at Semper Augustus, suggested that while Buffett might buy more shares, he is unlikely to take over the company. Bloomstran noted that Buffett prefers Occidental to initiate a stock buyback program, which CEO Vicki Hollub has said will only happen after significant debt reduction, Business Insider reported on Friday.

“I wouldn’t rule out a purchase of additional shares,” Bloomstran said, according to the report.

Further compounding the issue, Buffett holds warrants to buy an additional 83.5 million shares at a strike price of $59.62, nearly 20% above the current market price, according to Bloomstran.

The decline in Occidental’s stock price aligns with a 23% drop in crude oil prices, driven by concerns over demand and excess supply. Berkshire Hathaway‘s BRK BRK $13 billion investment in Occidental Petroleum is now potentially underwater.

Buffett’s conglomerate has been accumulating shares of Occidental since early 2022, with a significant buying spree in June at around $60 per share. Currently, Berkshire owns a 29% stake in the oil producer.

The $55-$60 price range had previously acted as a support level for Occidental’s stock since Buffett began his purchases, but this floor has now been breached for the first time in over two years.

According to HedgeFollowe, Berkshire Hathaway’s average purchase price for its stake is estimated at $51.22 per share, slightly above the current trading price.

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Why It Matters: The setback for Buffett comes amid a broader context of strategic shifts and market movements. Recently, Bank of America BAC CEO Brian Moynihan commented on Buffett’s reduction of his stake in the bank, noting that Buffett has been a stabilizing force but has sold nearly $7 billion in shares since mid-July.

Buffett has been selling shares in several companies, including Apple Inc. AAPL and Bank of America, as economic uncertainties loom.

Despite these challenges, Buffett’s investment acumen remains highly regarded. On his 94th birthday, Berkshire Hathaway reached a $1 trillion market cap milestone, underscoring his long-term success.

However, even Buffett has admitted to missed opportunities, such as his late investment in Amazon.com Inc.

Back in the mid-1990s, when Amazon was just an online bookstore with big dreams, Buffett had the chance to invest. He also passed on buying shares during Amazon’s IPO in 1997.

Reflecting on this now, Buffett doesn’t shy away from admitting his mistake. “I was too dumb to realize” the potential of Amazon and its visionary founder, Jeff Bezos, he’s said, with his usual blend of humility and humor.

Action Price: Occidental Petroleum’s stock is trading at $50.99, up 0.65% on Thursday. However, year to date, the stock has dropped by 15.09%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote