According to the latest U.S. Security and Exchange Commission (SEC) filing, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) bought another $1 billion in Occidental Petroleum (NYSE: OXY) at an average price of $54.41 to increase its already large position in the stock.
As of March 17, Berkshire owned 136.2 million shares of the stock which equates to a $7.2 billion value which comes out to about 13% of its float.
The move is notable, because Buffett has been vocal about the market being overvalued for the last few years. He holds a record amount of cash, and his largest purchases have been of Berkshire stock. Last year, the company bought back $27 billion but even this has slowed as Berkshire's stock has risen over the past year, indicating that Buffett sees shares as being closer to fair value.
So, the Occidental position is one of the few areas where he has been aggressive. And, he continues to be bullish on it despite the stock's massive rise over the past 2 years and recent strength in oil prices.
Warren Buffett's Berkshire Hathaway purchased an additional 18.1 million shares of Occidental Petroleum for almost $1 billion over the first three days of this week.
Berkshire also holds warrants to buy nearly 84 million more shares at a price around $60 per share. These are near an inflection point, where they could explode in value if the stock price keeps moving higher. Including these warrants, Berkshire could own 22% of the company.
In an interview with CNBC, Buffett said he started buying Occidental after reading the transcript of its earnings call. "I read every word, and said this is exactly what I would be doing. She's [CEO Vicki Hollub] running the company the right way." It also fits with Berkshire's growing energy business as it has invested or bought power generation companies and transmission companies.
YTD, Occidental shares are up 80%. Over the last few days, the stock has consolidated near its highs even though oil has been quite volatile. Even with its gains, the stock remains cheap with a forward P/E of 12.6.