Berkshire Hathaway (BRK-B), a major holder of Occidental Petroleum (OXY), continues to add to its stake in the company. The most recent pickup was a 242,241 share buy on Tuesday, representing a 0.13 percent increase in their holdings. The company paid $14.45 million for that stake.
That adds on to regular, consistent buying over the past few months. The conglomerate is now closing in on a 20 percent stake in Occidental.
The buying has continued even as oil prices have stalled out in recent weeks. Outside of major holders, company insiders own about 0.2 percent of shares.
The oil and gas development giant has seen shares rally 131 percent in the past year, and revenue has soared 58 percent on the back of strong energy prices. Shares are still somewhat inexpensive, at just over 6 times forward earnings.
Action to take: While some are speculating that Berkshire may seek to acquire the full company at some point, the size of doing so makes a deal just in the realm of possibility. Today’s buyers can get a 0.8 percent yield. That’s not huge for an energy giant, but there will likely be some strong buying underpricing shares, which could keep prices trending higher for some time.
For traders, the January $75 calls, last trading for about $5.40, offer mid-double-digit gains or better in the coming months on a rebound in shares. That would also put the stock back near its 52-week high before the recent selloff.
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 of the companies mentioned in this article.