Oxy Stock – Buffett’s stake in Texas-based Occidental is now worth $8.5 billion. It’s worth a look, as the stock has fallen a year after its inception.
Billionaire investor Warren Buffett’s Berkshire Hathaway bought 9.5 million shares of oil explorer Occidental Petroleum (OXY) last week, according to a recent SEC filing. , bringing his total stake in the company to about $8.5 billion. As of this writing Thursday afternoon, Occidental shares were trading at $56.70, up nearly 2% on the day.
Oxy Stock
Amid a broad sell-off in the energy sector, Buffett has picked stocks that have fallen. That said, he thinks Occidental is a good deal at the current price. Should I buy it?
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An SEC filing dated June 22 shows that Buffett bought his 9.5 million Occidental shares at an average price of $55.58. Occidental shares fell to their lowest levels in more than a month on June 17 and June 22.
Buffett’s purchases follow a broad sell-off in the energy sector that has seen shares of Occidental and other oil companies drop more than 20% from recent highs, and some have questioned whether the sector, and oil stocks in particular, have fallen. shining. Oil prices have fallen below $19 in the past two weeks, returning to levels not seen in about a month. But Buffett wouldn’t have invested another $535 million in Occidental Petroleum if he didn’t think a $55 stock was a good deal. It is down 25% from its recent high. Meanwhile, analysts have an average target price of $77.26 on the stock, representing a 38% premium to the current price.
Occidental CEO Vicki Hollub told CNBC in March that the company is running the company the right way and is “doing what I need to do” regarding her stake in Occidental. Last week’s purchase proves he remains optimistic about the company’s future.
Damien Courvalin, head of energy research at Goldman Sachs, told CNBC’s Joe Kernen that he expects oil prices to rise to $140 before last week’s correction.
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I’m not the only pundit saying oil prices will go up from here. So the oil balance trading desk may be gearing up for another move. Buffett recently bought an additional 9.5 million Occidental shares without hesitation. did you buy it?
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Occidental Petroleum Stock Rising With Oil Prices. Is It Time To Buy?
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Stock To Buy, 1 To Dump When Markets Open: Occidental Petroleum, Fubotv
I’d like to start this long-form, profit-focused series with a brief overview of the company. In this case, we are dealing with an independent oil and gas company worth over $35 billion. Incidental production of oil and natural gas properties in the United States and internationally; exploration and development. Occidental Oil & Gas; Chemicals It operates in three areas: media and marketing. In August, Occidental completed its $55 billion acquisition of Anadarko to cut costs and create synergies. Plus, the stock’s dividend yield of 7.9% is at multi-year lows.
The long-term chart for Occidental Petroleum shows that the stock made huge capital gains from 2000 to 2011. The stock has come a long way between its 1969-2000 IPO and 2011-2018 crash. This is one of the reasons I like this stock. A stop like 2000 would require buying more energy stocks at a discount in the absence of a commodity supercycle. Or in this case, the company hit an all-time high after falling 65%.
Basically, what happened was that the massive $55 billion acquisition of Anadarko was forced into a massive sale due to rapidly mounting debt. This debt load, reduced by the sale of African assets (among others), should reach $15 billion.
For example, Evercore ISI downgraded the stock to consensus from outperform, saying it believes deals such as mergers are “undervalued” and noting that Occidental Petroleum is large but “significantly undervalued.” J.P. Following the merger, JPMorgan downgraded the stock to underweight from neutral. Analysts at the bank noted that the company’s valuation is not attractive enough, especially given concerns about maintaining its high dividend yield. – Source debt levels are high but unbreakable.
Occidental Petroleum Stock: Ferc Approval Is A Game Changer (nyse:oxy)
Totally agree that debt levels are rising. Many financial sources put the debt/equity ratio at 1.5 to 1.8, but the official number, based on my own calculations based on SEC data, is 2.05. A look at Alpha’s own data, shown below, confirms this. Between the third quarter of 2018 and the third quarter of 2019; the company increased its assets to nearly $62 billion and its debt/equity ratio from 1.6 to 2.05.
Immediately this means investors value stocks differently. More risk means higher expected return on equity. The fundamentals are good, like rising oil prices, but leverage is great when things don’t look good. The good news is that the current ratio was unchanged at 1.33, suggesting that liquidity is not an issue.
Access to funding is another issue that doesn’t seem to be an issue. In August, the company sold $13 billion worth of debt to fund its acquisition of Anadarko. At its peak, the company received $75 billion in trade orders, according to a third party, Reuters reported. The loan is disbursed in 10 installments. The highest bid was for the 30-year bond, which yielded 2.25% more than U.S. Treasuries. However, Moody’s downgraded the rating to Baa3. S&P Global Ratings said it would downgrade the rating to BBB, although it is A. This is the second lowest premium level. This information comes from a Reuters article. The new information confirms the downgrade to BBB.
All things considered, this information doesn’t bother me on these levels. I don’t think the high level of debt will be fully priced in and cause the company to lose money.
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Occidental paid out dividends worth $1.77 billion in the first quarter of this year. Total cash from operations was $5.37 billion (up from $5.17 billion in 2018). it
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