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2022-07-05
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Why Buffett is Buying Occidental Petroleum Stock
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2022-07-15
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","listText":"Thanks ","text":"Thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9076679312","repostId":"1158390926","repostType":4,"repost":{"id":"1158390926","kind":"news","pubTimestamp":1657812543,"share":"https://ttm.financial/m/news/1158390926?lang=&edition=fundamental","pubTime":"2022-07-14 23:29","market":"us","language":"en","title":"Tesla Q2: A Complete Mess","url":"https://stock-news.laohu8.com/highlight/detail?id=1158390926","media":"Seeking Alpha","summary":"SummaryMargins in focus due to multiple headwinds.Investors expecting a major production update.The ","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>Margins in focus due to multiple headwinds.</li><li>Investors expecting a major production update.</li><li>The Twitter saga continues to provide a major overhang.</li></ul><p>We're only about a week away from electric vehicle maker Tesla (NASDAQ:TSLA) reporting its Q2 results on Wednesday, July 20th. This is likely to be the most difficult quarter to handicap for the company in some time, primarily given the Shanghaifactory shut down for a good chunk of the quarter. Today, I will examine some of the key items to watch for next week.</p><p>First, we know that production and deliveries took a sizable sequential hit, even with two new factories in Berlin and Austin starting to ramp production. Total vehicles delivered were down more than 55,000 units from Q1's record, with Shanghai unable to produce for a good chunk of April, and limited production for a number of weeks when the factory did reopen. Currently, the Street is looking for revenues of $17.16 billion and non-GAAP EPS of $1.87, as compared to $18.76 billion and $3.22, respectively, in Q1 of this year.</p><p>Tesla's average selling prices (excluding credit sales) will benefit from rising prices, a higher mix of S/X sales in the quarter, and a lower overall percentage of leased vehicles in the total. On the flip side, a stronger dollar during Q2 should have provided a headwind to the company's topline. For those that include credit sales in their overall numbers, that number is expected to come down quite a bit sequentially given the large one-time benefit reported in Q1.</p><p>The most important item I'll be looking at will be margins. Between the factory ramps, Shanghai shutdown, loss of credit sales, and cost inflation, Tesla margins are expected to take a hit in Q2. I'm currently looking for total automotive gross margins on a GAAP basis to decline by about 4 percentage points from Q1 levels, coming in at almost 29%. I do think we'll see some cost savings on the operating side, but then you have major restructuring charges and an impairment on the Bitcoin holding that should ding the bottom line by more than half a billion dollars, pre-tax. In the graphic below, you can see my usual three earnings cases, with dollar values in millions except per share amounts.</p><p><img src=\"https://static.tigerbbs.com/539e0b94f9dcf9da263d4e4e1becf6cd\" tg-width=\"551\" tg-height=\"595\" referrerpolicy=\"no-referrer\"/></p><p>Tesla Three Earnings Cases (Author's Estimates, Company Q1 Results)</p><p>At the moment, my base case looks a bit weaker than the Street. First of all, there are some analysts that don't seem to have updated their numbers recently, since the high revenue estimate on the Street is nearly $20 billion. That makes no sense given the massive drop in deliveries from Q1. If we get more realistic estimates in, the average should drop a few hundred million at least. On the bottom line, I can say the same thing, plus we also don't know which analysts have included the huge Bitcoin charge and restructuring costs in their estimates. Thus, I won't be as much concerned as how the headline results compare to the Street next Wednesday, unless there is a major difference, but will focus more on how those numbers came to be.</p><p>The second major item investors will be watching for will be a complete update on production. The Shanghai factory is expected to be shut down for a couple of weeks this month for production upgrades, which could allow it to have its best quarter ever. Key Tesla watcher Troy Teslike is calling for 365,000 deliveries during the current Q3. He has the street average nearly 25,000 above that, but figures estimates might come down as analysts factor in the Shanghai closure and temporary Berlin shutdown. Barring another Covid shutdown in China or some other major adverse event, Tesla is expected to set quarterly production and delivery records, which makes sense now that it has four factories that are fully operational (minus brief pauses).</p><p>With us now a couple of weeks into the second half of the year, Tesla could also provide an update on some of its currently delayed projects. The Semi was supposed to be here in 2019, with the Roadster in 2020, and Cybertruck in 2021. None of those products are currently available, and for some, they are just hopes for next year if all goes right. Investors and consumers are also waiting to hear how the full self-driving software package is coming, as that is key to the Tesla robotaxi business that was supposed to be here over 18 months ago.</p><p>As for Tesla shares, they are currently trading towards their lows for 2022. As the chart below shows, they again lost their 50-day moving average (purple line) on Monday. The Elon Musk Twitter (TWTR) saga continues to provide an overhang, with the social media company headed to court to enforce the Tesla CEO's purchase. If Twitter is successful, Elon Musk may have to sell more shares of Tesla, depending on how much side funding he can cobble together. The Musk aura also took a slight hit Monday evening after an unexpected failure of a rocket booster for SpaceX, raising questions about the near-term path of the Starship program.</p><p><img src=\"https://static.tigerbbs.com/a24444b453a33f31ef8bc8e53a639d9f\" tg-width=\"640\" tg-height=\"270\" referrerpolicy=\"no-referrer\"/></p><p>Tesla 6-Month Chart (Yahoo! Finance)</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla Q2: A Complete Mess</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla Q2: A Complete Mess\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-07-14 23:29 GMT+8 <a href=https://seekingalpha.com/article/4522958-tesla-tsla-q2-earnings-complete-mess><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryMargins in focus due to multiple headwinds.Investors expecting a major production update.The Twitter saga continues to provide a major overhang.We're only about a week away from electric ...</p>\n\n<a href=\"https://seekingalpha.com/article/4522958-tesla-tsla-q2-earnings-complete-mess\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4522958-tesla-tsla-q2-earnings-complete-mess","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1158390926","content_text":"SummaryMargins in focus due to multiple headwinds.Investors expecting a major production update.The Twitter saga continues to provide a major overhang.We're only about a week away from electric vehicle maker Tesla (NASDAQ:TSLA) reporting its Q2 results on Wednesday, July 20th. This is likely to be the most difficult quarter to handicap for the company in some time, primarily given the Shanghaifactory shut down for a good chunk of the quarter. Today, I will examine some of the key items to watch for next week.First, we know that production and deliveries took a sizable sequential hit, even with two new factories in Berlin and Austin starting to ramp production. Total vehicles delivered were down more than 55,000 units from Q1's record, with Shanghai unable to produce for a good chunk of April, and limited production for a number of weeks when the factory did reopen. Currently, the Street is looking for revenues of $17.16 billion and non-GAAP EPS of $1.87, as compared to $18.76 billion and $3.22, respectively, in Q1 of this year.Tesla's average selling prices (excluding credit sales) will benefit from rising prices, a higher mix of S/X sales in the quarter, and a lower overall percentage of leased vehicles in the total. On the flip side, a stronger dollar during Q2 should have provided a headwind to the company's topline. For those that include credit sales in their overall numbers, that number is expected to come down quite a bit sequentially given the large one-time benefit reported in Q1.The most important item I'll be looking at will be margins. Between the factory ramps, Shanghai shutdown, loss of credit sales, and cost inflation, Tesla margins are expected to take a hit in Q2. I'm currently looking for total automotive gross margins on a GAAP basis to decline by about 4 percentage points from Q1 levels, coming in at almost 29%. I do think we'll see some cost savings on the operating side, but then you have major restructuring charges and an impairment on the Bitcoin holding that should ding the bottom line by more than half a billion dollars, pre-tax. In the graphic below, you can see my usual three earnings cases, with dollar values in millions except per share amounts.Tesla Three Earnings Cases (Author's Estimates, Company Q1 Results)At the moment, my base case looks a bit weaker than the Street. First of all, there are some analysts that don't seem to have updated their numbers recently, since the high revenue estimate on the Street is nearly $20 billion. That makes no sense given the massive drop in deliveries from Q1. If we get more realistic estimates in, the average should drop a few hundred million at least. On the bottom line, I can say the same thing, plus we also don't know which analysts have included the huge Bitcoin charge and restructuring costs in their estimates. Thus, I won't be as much concerned as how the headline results compare to the Street next Wednesday, unless there is a major difference, but will focus more on how those numbers came to be.The second major item investors will be watching for will be a complete update on production. The Shanghai factory is expected to be shut down for a couple of weeks this month for production upgrades, which could allow it to have its best quarter ever. Key Tesla watcher Troy Teslike is calling for 365,000 deliveries during the current Q3. He has the street average nearly 25,000 above that, but figures estimates might come down as analysts factor in the Shanghai closure and temporary Berlin shutdown. Barring another Covid shutdown in China or some other major adverse event, Tesla is expected to set quarterly production and delivery records, which makes sense now that it has four factories that are fully operational (minus brief pauses).With us now a couple of weeks into the second half of the year, Tesla could also provide an update on some of its currently delayed projects. The Semi was supposed to be here in 2019, with the Roadster in 2020, and Cybertruck in 2021. None of those products are currently available, and for some, they are just hopes for next year if all goes right. Investors and consumers are also waiting to hear how the full self-driving software package is coming, as that is key to the Tesla robotaxi business that was supposed to be here over 18 months ago.As for Tesla shares, they are currently trading towards their lows for 2022. As the chart below shows, they again lost their 50-day moving average (purple line) on Monday. The Elon Musk Twitter (TWTR) saga continues to provide an overhang, with the social media company headed to court to enforce the Tesla CEO's purchase. If Twitter is successful, Elon Musk may have to sell more shares of Tesla, depending on how much side funding he can cobble together. The Musk aura also took a slight hit Monday evening after an unexpected failure of a rocket booster for SpaceX, raising questions about the near-term path of the Starship program.Tesla 6-Month Chart (Yahoo! Finance)","news_type":1},"isVote":1,"tweetType":1,"viewCount":719,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9070010796,"gmtCreate":1656983096715,"gmtModify":1676535926545,"author":{"id":"4095392981472950","authorId":"4095392981472950","name":"DdDy","avatar":"https://static.tigerbbs.com/d460b13dcdc03c5c4b4eb47567c2b1de","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4095392981472950","authorIdStr":"4095392981472950"},"themes":[],"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9070010796","repostId":"1100209736","repostType":4,"isVote":1,"tweetType":1,"viewCount":1147,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9070010796,"gmtCreate":1656983096715,"gmtModify":1676535926545,"author":{"id":"4095392981472950","authorId":"4095392981472950","name":"DdDy","avatar":"https://static.tigerbbs.com/d460b13dcdc03c5c4b4eb47567c2b1de","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4095392981472950","authorIdStr":"4095392981472950"},"themes":[],"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9070010796","repostId":"1100209736","repostType":4,"repost":{"id":"1100209736","kind":"news","pubTimestamp":1656945280,"share":"https://ttm.financial/m/news/1100209736?lang=&edition=fundamental","pubTime":"2022-07-04 22:34","market":"us","language":"en","title":"Why Buffett is Buying Occidental Petroleum Stock","url":"https://stock-news.laohu8.com/highlight/detail?id=1100209736","media":"InvestorPlace","summary":"Berkshire Hathaway is executing a slow-motion takeover of Occidental Petroleum.Berkshire owns 16.4% ","content":"<html><head></head><body><ul><li><b>Berkshire Hathaway</b> is executing a slow-motion takeover of <a href=\"https://laohu8.com/S/OXY\">Occidental Petroleum</a>.</li><li>Berkshire owns 16.4% of the common and could control one-third with warrants.</li><li>Buffett likes undervalued assets, and OXY stock is undervalued.</li></ul><p>Spurred by purchases from Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A), Occidental Petroleum (NYSE:OXY) emerged as a big winner in 2022, with OXY stock more than doubling in price.</p><p>Occidental was founded in 1920 by Armand Hammer, whose 1996 biography called him a Soviet agent. Since Hammer’s death in 1990, Occidental has increasingly focused on domestic energy.</p><p>Occidental was a major player in the 2010s’ fracking boom. It continued to grow despite the fracking bust, buying Anadarko Petroleum for what became $38 billion in debt, just before the Covid-19 pandemic.</p><p>In 2020, it was on the verge of bankruptcy. But the company managed to survive, and by March of this year, Berkshire had scooped up more than 136 million shares. Berkshire continued to add to its position in the second quarter, which by the end of June had grown to a 16.4% stake.</p><p>Buffett’s move on Occidental is mainly aimed at its debt. Debt that looks bad to you and me can look good to Berkshire. Here’s how.</p><h3>Control the Debt</h3><p>As Kiplinger’s Dan Burrows points out, Berkshire owns $10 billion in preferred shares, which pay dividends of 8%, as well as 84 million warrants to buy more common stock, with a strike price of $59.62. When the warrants are included, Berkshire owns about one-third of the company. A Truist Securities analyst said Berkshire might buy all of Occidental if its credit rating improves.</p><p>Occidental had nearly $26 billion in long-term debt at the end of March, but this was down 27% year over year. Yet, it still had $371 million in interest expenses during the first quarter.</p><p>Occidental debt carries interest rates as high as 8.75%. But it has recently begun getting better prices, including 4.4% on a 25-year note.</p><p>If Occidental debt becomes investment grade, its value will increase and debt service costs will drop. Berkshire could then roll over the debt at lower prices and Occidental could even raise its dividend, which is currently just 13 cents a share. Buffett likes dividends.</p><h3>Buffett’s Energy Play</h3><p>Occidental is one of the largest producers of oil in the Permian Basin, with a maintenance hub in New Mexico. It also has interests in the Rocky Mountains and has done extensive work to lower its drilling costs, including building pipelines to drilling sites.</p><p>This means it lines up well with Berkshire Hathaway Energy, which mostly consists of electric and natural gas utilities, but also owns wind farms and solar energy contracts. Occidental production would deliver these operations with stable prices during a time of uncertainty. With oil now priced at over $100 a barrel, that is important.</p><p>Berkshire Hathaway announced last year that Berkshire Energy head Greg Abel will replace Buffett as its CEO when he eventually steps down.</p><p>After Buffett leaves, Abel will emerge as America’s most powerful energy executive. His track record includes buying renewable energy, with big investments in power lines and other long-distance infrastructure. Berkshire utilities would be self-sufficient, using its own fuel and selling electricity at retail.</p><h3>The Bottom Line on OXY Stock</h3><p>In addition to the Occidental stake, Berkshire also holds a nearly $26 billion stake in Chevron (NYSE:CVX). Chevron is up 25% so far in 2022.</p><p>Of course, nearly all energy stocks have risen this year in response to the Ukraine war. Permian producers EOG Resources (NYSE:EOG) and Pioneer Natural Resources (NYSE:PXD) are up 23%-24%. Exxon Mobil (NYSE:XOM) is up 43% thanks to its Permian production and refining capacity. But Occidental Petroleum’s gain tops them all, with OXY stock up 109% year to date.</p><p>Buffett likes undervalued assets, and the run-up in oil, combined with its debt, made OXY stock undervalued. Buffett has always made his big money when markets are panicking. At age 91, he is proving capitalism works again.</p></body></html>","source":"lsy1606302653667","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Why Buffett is Buying Occidental Petroleum Stock</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy Buffett is Buying Occidental Petroleum Stock\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-07-04 22:34 GMT+8 <a href=https://investorplace.com/2022/07/why-buffett-is-buying-oxy-stock/><strong>InvestorPlace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Berkshire Hathaway is executing a slow-motion takeover of Occidental Petroleum.Berkshire owns 16.4% of the common and could control one-third with warrants.Buffett likes undervalued assets, and OXY ...</p>\n\n<a href=\"https://investorplace.com/2022/07/why-buffett-is-buying-oxy-stock/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"OXY":"西方石油"},"source_url":"https://investorplace.com/2022/07/why-buffett-is-buying-oxy-stock/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1100209736","content_text":"Berkshire Hathaway is executing a slow-motion takeover of Occidental Petroleum.Berkshire owns 16.4% of the common and could control one-third with warrants.Buffett likes undervalued assets, and OXY stock is undervalued.Spurred by purchases from Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A), Occidental Petroleum (NYSE:OXY) emerged as a big winner in 2022, with OXY stock more than doubling in price.Occidental was founded in 1920 by Armand Hammer, whose 1996 biography called him a Soviet agent. Since Hammer’s death in 1990, Occidental has increasingly focused on domestic energy.Occidental was a major player in the 2010s’ fracking boom. It continued to grow despite the fracking bust, buying Anadarko Petroleum for what became $38 billion in debt, just before the Covid-19 pandemic.In 2020, it was on the verge of bankruptcy. But the company managed to survive, and by March of this year, Berkshire had scooped up more than 136 million shares. Berkshire continued to add to its position in the second quarter, which by the end of June had grown to a 16.4% stake.Buffett’s move on Occidental is mainly aimed at its debt. Debt that looks bad to you and me can look good to Berkshire. Here’s how.Control the DebtAs Kiplinger’s Dan Burrows points out, Berkshire owns $10 billion in preferred shares, which pay dividends of 8%, as well as 84 million warrants to buy more common stock, with a strike price of $59.62. When the warrants are included, Berkshire owns about one-third of the company. A Truist Securities analyst said Berkshire might buy all of Occidental if its credit rating improves.Occidental had nearly $26 billion in long-term debt at the end of March, but this was down 27% year over year. Yet, it still had $371 million in interest expenses during the first quarter.Occidental debt carries interest rates as high as 8.75%. But it has recently begun getting better prices, including 4.4% on a 25-year note.If Occidental debt becomes investment grade, its value will increase and debt service costs will drop. Berkshire could then roll over the debt at lower prices and Occidental could even raise its dividend, which is currently just 13 cents a share. Buffett likes dividends.Buffett’s Energy PlayOccidental is one of the largest producers of oil in the Permian Basin, with a maintenance hub in New Mexico. It also has interests in the Rocky Mountains and has done extensive work to lower its drilling costs, including building pipelines to drilling sites.This means it lines up well with Berkshire Hathaway Energy, which mostly consists of electric and natural gas utilities, but also owns wind farms and solar energy contracts. Occidental production would deliver these operations with stable prices during a time of uncertainty. With oil now priced at over $100 a barrel, that is important.Berkshire Hathaway announced last year that Berkshire Energy head Greg Abel will replace Buffett as its CEO when he eventually steps down.After Buffett leaves, Abel will emerge as America’s most powerful energy executive. His track record includes buying renewable energy, with big investments in power lines and other long-distance infrastructure. Berkshire utilities would be self-sufficient, using its own fuel and selling electricity at retail.The Bottom Line on OXY StockIn addition to the Occidental stake, Berkshire also holds a nearly $26 billion stake in Chevron (NYSE:CVX). Chevron is up 25% so far in 2022.Of course, nearly all energy stocks have risen this year in response to the Ukraine war. Permian producers EOG Resources (NYSE:EOG) and Pioneer Natural Resources (NYSE:PXD) are up 23%-24%. Exxon Mobil (NYSE:XOM) is up 43% thanks to its Permian production and refining capacity. But Occidental Petroleum’s gain tops them all, with OXY stock up 109% year to date.Buffett likes undervalued assets, and the run-up in oil, combined with its debt, made OXY stock undervalued. Buffett has always made his big money when markets are panicking. At age 91, he is proving capitalism works again.","news_type":1},"isVote":1,"tweetType":1,"viewCount":1147,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9076679312,"gmtCreate":1657847018436,"gmtModify":1676536071414,"author":{"id":"4095392981472950","authorId":"4095392981472950","name":"DdDy","avatar":"https://static.tigerbbs.com/d460b13dcdc03c5c4b4eb47567c2b1de","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4095392981472950","authorIdStr":"4095392981472950"},"themes":[],"htmlText":"Thanks ","listText":"Thanks ","text":"Thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9076679312","repostId":"1158390926","repostType":4,"isVote":1,"tweetType":1,"viewCount":719,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
