Berkshire Hathaway resumes Occidental purchases, stake reaches 22.2%

By Jonathan Stempel

(Reuters) – Warren Buffett’s Berkshire Hathaway Inc has resumed its purchases of Occidental Petroleum Corp shares after a five-month hiatus, increasing its stake in the oil company to about 22.2%, a regulatory filing showed on Tuesday.

Berkshire paid about $355 million for 5.8 million Occidental shares between March 3 and March 7, according to the filing.

The purchases were the first Berkshire has disclosed since late September. It ended last year with a 21.4% stake.

In August, Berkshire won U.S. Federal Energy Regulatory Commission permission to buy up to 50% of Occidental’s common stock.

Buffett’s company now owns about 200.2 million Occidental shares worth $12.2 billion, based on Tuesday’s closing price of $60.85.

Those shares would generate about $144 million of annual dividends, following a 38% increase that Occidental announced last month.

Berkshire also owns $10 billion of Occidental preferred stock that throws off $800 million of annual dividends, plus warrants to buy another $5 billion of common stock.

Occidental ended January with about 900 million shares outstanding.

Berkshire began buying large quantities of the Houston-based company’s stock about one year ago.

After its stake surpassed 20%, Berkshire adopted the equity method of accounting for its holdings, and now reports its share of Occidental’s results with its own.

Accounting rules normally require the equity method above the 20% threshold, reflecting an assumption that the holder might exert significant influence.

Berkshire ended 2022 with $128.6 billion of cash and equivalents. It plans to keep a $30 billion cushion.

Occidental’s share price more than doubled in 2022, benefiting from higher oil prices after Russia invaded Ukraine.

Though fourth-quarter profit was lower than analysts expected, Occidental said it planned to raise capital spending this year and could repurchase up to $3 billion of stock.

Berkshire also owns dozens of companies including Geico car insurance, the BNSF railroad, consumer brands such as Dairy Queen and Fruit of the Loom, and other stocks including Apple Inc.

(Reporting by Jonathan Stempel in New York; Editing by Jamie Freed)