Warren Buffett’s Firm Just Bought More OXY Stock

May 16, 2023

Every time Occidental Petroleum (OXY) drops, buy it for three key reasons.

For one, $70 oil isn’t sustainable. In fact, according to the International Energy Agency (IEA), “The current market pessimism, however, stands in stark contrast to the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by almost 2 million barrels per day (bpd),” as quoted by Reuters.

Two, if you pull up a two-year chart of crude, every time oil gets this oversold, it bounces back shortly after. Plus, deeply oversold RSI and W%R indicators can pinpoint potential reversals. Even Goldman Sachs just said “RSI has been a good indicator of entry points on the previous sell-offs, and ‘we are getting closer’ to where the CTAs (Commodity Trading Advisors) get squeeze again: after all, as shown below, the 7-day RSI in oil as now approaching record lows!”

And three, Warren Buffett loves the OXY stock on pullbacks.

In March, Berkshire Hathaway bought another 5.8 million shares of OXY, paying between $59.80. and $61.90. Also, in March, the firm would buy another 3.7 million shares for $218 million. Today, it was announced the firm bought another $130 million worth of the OXY stock. That now brings the firm’s holdings in OXY to 213.9 million shares, valued at over $12 billion.

“Since Berkshire began accumulating stock in Occidental in early 2022, there was speculation that Buffett might want to buy the whole company. But he said recently at Berkshire’s annual meeting that he doesn’t seek control of the company,” says Barron’s.

Not only is OXY a strong company, it recently hiked its dividend by 38% to 18 cents a share, and it announced a new $3 billion stock buyback program.

Again, every time OXY pulls back, Buffett’s firm is likely to buy even more.

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