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Warren Buffett believed that he had found another cash machine when he loaded it on the oil arrow in Oxidental in 2022. Berkchire Hathaway went deep, and gathered enough shares to own 28 % of the oil company. This made the largest contributor to Berkshire Oxidnette.
But oil prices in the United States are now sliding to less than $ 60 a barrel, and the OCCIDENTAL share decreased to its lowest level in more than three years. Most of Warren’s purchases were priced at more than $ 50 per share. The stock was closed at $ 39 on Friday.
The value of Berkshire’s position decreased by about $ 6.4 billion since its peak last year, based on fact data. The whole thing is now the test of Warren’s condemnation – and the duration of his desire to sit on a bleeding investment.
Greg Abel must decide what to do with fallen stocks
according to Wall Street MagazineInvestors are watching Greg Abel, the man chose Warren to take over. Nobody is really expected to get rid of the shares completely. Berkshire does not act quickly under pressure. But the questions are constructive: Does Greg reduce the situation, wait for a recovery, or buy the rest of the company directly while the price is low?
“It seems foolish now. But I don’t think it will be wrong,” said Cole Smid, CEO of Smead Capital Management, who has stocks in Berkshire and Occidental. Cole believes that the company still has strong drilling prospects, and a lot of oil has left to withdraw from the ground.
Vicky Halloub, CEO of Oxidental, has no change in Berkshire’s behavior yet. She is still making trips to Omaha with her team to speak. She said that Warren is not trying to manage the company, but he loves to hear how the business works. She told the magazine newspaper: “He will say things like,” as you know, I may not get this, and I will not understand that, but I want to talk about it, and I hear about them. “
Oxidental said on Wednesday that it plans to reduce spending this year by about 3 %, thanks to better efficiency. After a day, her stock jumped 6.2 %. However, mood changes around investment.
Warren used to launch Occidental during every annual meeting in Berkshire. This year, in what was the last position of CEO, he did not say a word about that. Vicky was sitting in the crowd.
Both debts, oil prices and clean energy cuts are closed
This is not Warren’s first task with oil. In 2008, he poured billions in Konokovilps – then hit the financial crisis and oil tanks. He later invested in Exxon Mobil but was saved in 2014.
He already knew oxidantal well. In 2019, during a battle with Chevron about who will buy Anadarko Petroleum, Vicki made a deal with Warren: $ 10 billion in favorite stocks that pay 8 % of annual profits – that is, $ 800 million every year. Warren said he loved how I put her strategy for analysts: “Vicky Holoub was not saying he had nothing but meaning.”
But since then, things have become messy. Vicky went on everything to capture carbon although technology is still not proven. Warren did not object. Oxidental later decreased $ 11 billion on the Crowdrock, which is the pyramid. This deal added to the company’s debts, which is now 24 billion dollars.
Now, the demand for oil is expected to take great success. President Trump’s tariff raises fears of global slowdown. Meanwhile, OPEC and its partners pump more oil, which increases the low prices and dragging them.
Another threat. The Ministry of Energy prepares the main discounts for financing clean energy. This can prevent approximately $ 10 billion to support projects such as the Carbon Oxidental attachment in South Texas.
Even with all this pressure, some investors do not walk far away. They say Oxidental has something other hugs do not do: inventory. The company’s recent acquisitions built a good offer while the competitors dried up. This can help the bounce if the prices rise. “They have a lot of oil to go out and produce for a very long time,” Cole said.
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