Berkshire Hathaway (BRK-A), a major holder of Occidental Petroleum (OXY), has made two recent additions to their stake. Over two trades in the past two weeks, the company has bought $258 million of Occidental shares.
The most recent prior buy was back in February, the last time shares traded down to the low $60 range. With its latest stake, Berkshire now owns about 28% of Occidental. There have been no other insiders active over the last two years.
Overall, Occidental insiders own 28.3% of shares, and institutional investors own another 53.4% of the oil giant. Berkshire Hathaway has permission to buy up to 50% of the company.
Many investors see the Berkshire buy as part of a long-term plan to gradually acquire Occidental entirely.
Occidental trades at 14 times earnings, and shares have bobbed up and down in line with oil prices over the past year. Currently, shares are just up about 3%, and have a 1.5% dividend.
Action to take: Investors who think oil is inexpensive here (and under $80 it looks that way), may want to follow in Berkshire’s steps and build a stake. Look to buy in the low-$60 range or less.
For traders, shares do tend to bounce higher following a drop this low. The August $65 calls, last trading for about $0.70, could see mid-double-digit returns on a oil rally this summer that boosts Occidental shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.