Warren Buffett's Berkshire Hathaway buys additional 3.7 million shares of Occidental Petroleum

Yahoo Finance Live anchors Julie Hyman and Brad Smith break down the rise in stock for Occidental Petroleum following the purchase of more stock by Warren Buffett's Berkshire Hathaway.

Video Transcript

JULIE HYMAN: Just a few minutes left till the opening bell. Let's take a look at some movers that we're watching. Occidental Petroleum up about 2% this morning. Different day, same buyer. We're talking about Warren Buffett's Berkshire Hathaway upping its stake again in the petroleum company to over 23% after buying an additional 3.7 million shares here. That takes its indirect ownership to about 212 million shares. Berkshire owns about 24% or so of Occidental, and it's just been this steady drip, drip, drip, drip, drip that it has been buying of those shares.

Separately, it got an upgrade to outperform from market perform over at Cowen, with the analyst there saying it's got superior exposure to oil pricing. That's one of the reasons that it likes the stock.

BRAD SMITH: Yeah, saying that they see a superior risk-reward balance there for Occidental Petroleum. So those-- that a vote of confidence and to crude pricing specifically is what they noted here. Crude pricing, capital structure shifts, captive buying support from Berkshire Hathaway, which was aforementioned and we saw come through today. And then also a favorable free cash yield plus a differentiated catalyst rich profile in a world of relatively homogeneity across E&Ps, as they always say.

JULIE HYMAN: Yeah, I mean, so it's exploration and production, right? It does that in the oil space. But it also apparently has a low carbon ventures business that the analyst is highlighting here. And that business, which does carbon capture, storage, utilization, has what the analyst says are unique tax efficient benefits. So interesting little piece there, in addition to that very big buyer that has been supporting. I mean, that said, by the way, the stock is down, along with many of its peers, this year. It's off, I think, by about 5% for the year to date, even if it-- as it's rising once again this morning.

BRAD SMITH: Yeah, year to date, the entire sector, XLE, you look at that. That's down by about 5 and 3/4%, so kind of mirroring what we've seen within shares of OXY for the start of the year, as we're about to round out or at least end out the first quarter of this year. My, how time has flown, but at the end of the day, XLE, of course, the biggest move to the upside that we've seen in the markets last year here, as we've seen, of course, a little bit of a reversal of some of those trends earlier on in the year, where technology had taken a hit on the chin last year. That now one of the biggest rebound stories that we've seen. Energy on the other side of that trade there.

JULIE HYMAN: Yeah, exactly. It's been a little flippy flop that we've seen in these markets here in terms of sector leadership.