Occidental Petroleum is Warren Buffett’s biggest investment in recent years. He now owns 20% of the shares for an investment of more than 15 billion dollars. After a health crisis which did not inspire him much on the stock market, the 92-year-old billionaire therefore came back in force and particularly with this oil company, at the time of the war in Ukraine. After several weeks of building his position, he now finds himself in a situation strangely close to the one he had known with Apple in 2018.
Warren Buffett buys, Carl Icahn sells
The first observation, first, is that Warren Buffett took exactly the same posture as he had with the activist investor Carl Icahn when he coveted Apple. By the time Berkshire Hathaway, the billionaire’s investment company, was spending $36 billion on the tech company, Carl Icahn had already sold his. In 2022, it was the same with Occidental Petroleum. Warren Buffett arrived as the activist investor was liquidating his position. The result, not of an opposing view of the company, but of two different investment strategies that benefited both.
Carl Icahn follows a short-term strategy when Warren Buffett became known for his long-term stock market investments. But usually, when the two find themselves leaning into a business, it’s a pretty good sign. The activist investor quickly sells his shares because his strategy is to focus on undervalued companies and use his power to bring about the necessary changes and make the company shine again in the markets. He had done so with Apple from 2013 and repeated his strategy with Occidental Petroleum in 2019. As for Warren Buffett, he arrived much later on the Apple file but thanks to his long-term strategy, his investment of 36 billion dollars today is worth 160 billion dollars.
The same idea as with Apple
The other common point is in what animates Warren Buffett with Occidental Petroleum. Unlike Carl Icahn who walked away from the market, taking advantage only of the surge in oil prices with the war in Ukraine, Warren Buffett shows that he is convinced that the prices of black gold will not fall any time soon. . On the contrary. And that brings the company closer to the iPhone manufacturer: the investor is betting on a product whose price will increase over time and become unavoidable.
Since January 1, 2022, Occidental Petroleum shares have already taken more than 110%, for a capitalization of 62 billion dollars. Ten years ago, it reached its highest at more than 100 dollars per share. The bet therefore seems to be on track to be a success for the investor – who certainly does not intend to liquidate his position in the near future. Since 1960, the investor and his company have recorded an annual return of more than 20%, a record. In this year 2022 alone, it has already invested $52 billion in new companies, including HP.