Warren Buffett frowned when he said this. berkshire hathawaysale of 10 million shares of apple However, I won’t read too much into this move.
Apple remains Berkshire’s largest holding in its portfolio. Buffett is almost certainly still a fan of the company. Less than a year ago, he told Berkshire shareholders that Apple was “a better company than any other company we own.”
Investing in Apple proved to be a wise decision for Mr. Buffett. Apple’s market capitalization has increased by nearly $2.2 trillion since he first bought shares of the tech giant in the first quarter of 2016.
But Buffett is now actively buying other stocks. And it might be the smartest big bet since making billions with Apple.
Buffett’s Big Jig Jig
As far as I know, Buffett never once uttered the phrase, “Zag when others zag.” But his famous statement, “Be fearful when others are greedy, and greedy when others are fearful,” expresses a similar sentiment. The legendary investor practices what he preaches with what could be called a pretty big jig. western oil (Oxy -0.84%) Pass the fist.
Conventional wisdom is that demand for fossil fuels will decline and renewable energy will emerge as its replacement. This view may seem logical, as countries and companies around the world set ambitious targets to reduce carbon emissions. Considering the changing dynamics in the energy sector, investing in oil stocks like Occidental may seem unwise.
Buffett disagrees. He told CNBC in April 2023 that in five years there will be more oil produced than today, or at least “about the same amount.” The Berkshire Hathaway CEO is betting big on being proven right.
Berkshire currently owns nearly $14.9 billion worth of Occidental Petroleum stock. Occidental is his sixth-largest position in Berkshire’s portfolio (behind only another oil and gas producer) chevron, by the way. )
occidental lottery
I don’t think Buffett has ever bought a lottery ticket in his life. At Berkshire Hathaway’s 2016 shareholder meeting, he called buying lottery tickets “mathematically unsound.” But I think his investment in Occidental comes with something of a lottery ticket. Even though the odds are definitely higher than Powerball.
Occidental is betting big on direct air capture (DAC). What is DAC? In short, this technology aims to suck carbon dioxide out of the air. The CO2 is then stored underground.
In August 2023, Occidental announced the acquisition of Carbon Engineering, a leader in DAC technology development, for $1.1 billion. The company is also building a multibillion-dollar Stratos plant in the middle of an oil field in West Texas. Once operational, Stratos will be the largest DAC facility to date, 100 times larger.
Carbon capture can present significant opportunities. exxon mobil Occidental CEO Vicki Holub believes DAC in particular has the potential to breathe new life into the oil and gas industry. She told National Public Radio in December 2023 that if the DAC’s vision is achieved, “there is no reason not to produce oil and gas forever.”
Buffett also participated
Buffett appears to be fully on board with Occidental’s focus on DAC. In an interview with CNBC last year, he praised Holub as “very capable” and understanding of “oil and political realities.”
His aggressive buying of Occidental stock is likely to continue. Berkshire won regulatory approval to acquire up to 50% of the oil company’s stock in August 2022. The company’s shareholding rate is currently over 28%.
Will Buffett love Occidental as much as he loves Apple? Probably not. But his investment in Oxy could be Omaha’s best big bet since he joined Apple eight years ago.
Keith Speights has held positions at Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
