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Warren Buffett's Berkshire Hathaway buys another 1.9 million shares of Occidental Petroleum

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Yahoo Finance Editor-in-Chief Andy Serwer discusses Berkshire's stake in Occidental Petroleum and what that indicates to investors.

Video Transcript

[MUSIC PLAYING]

JARED BLIKRE: Warren Buffett is making moves-- sorry about that, Dave.

DAVE BRIGGS: That's all right, brother. You're good. You're good. Warren Buffett is making moves. The billionaire's Berkshire Hathaway has acquired an almost 20% stake in Occidental Petroleum. Joining us now is editor-in-chief at Yahoo Finance, Andy Serwer. Andy, good to see you, sir. You say Buffett's investment in Occidental is both simple and complicated. Let's start with the simple part.

ANDY SERWER: Yeah, that's right, Dave-- or is it Jared? It's Dave. It's both of you guys. I love seeing you all. Yeah, as you said, he owns almost 20%. Not quite 20%, Dave, because if he owns over 20%, then he's got to consolidate earnings, which is a decision he's going to have to make. But if you go back to his annual meeting on the last Saturday in April, Buffett talked about this company.

And he said, you know, I love what Occidental CEO Vicki Hollub is doing. So I decided to put my money there. So he bought a bunch leading up to the annual meeting in February and March. And then since then, he's bought a bunch of stocks. So it looks like, oh, this is just a great investment. And he's putting his money down. He likes the price of oil. He likes oil as a long-term investment. Simple, right?

RACHELLE AKUFFO: Well, that's the simple part. So then the question, then, what's the complicated part, Andy?

ANDY SERWER: Ah, Rachelle, the complicated part is complicated, but we're going to talk about it briefly. So, first of all, Oxy Pete, as it's known on Wall Street, is just a fascinating story with Armand Hammer, the patriarch of this company, for decades, cozying up to the Russians and Gaddafi and President Nixon and all kinds of incredible larger than life stories going on there.

But the company is a mid-major. It's not one of the major oil companies like an Exxon or a Chevron. It's only about the 11th biggest company in the United States. And in 2019, it made a hostile takeover bid for Anadarko. Needed cash, went to Omaha, and got a $10 billion infusion from Warren Buffett in return for warrants and preferred stock. He held those investments and then also added to that.

But then COVID came, price of oil crashed. Buffett reduced his stake and went negative, apparently, on Occidental Petroleum. And then, of course, there's been a recovery in the economy, recovery in the oil markets, recovery in Occidental stock, and Buffett's gotten back in. So it's not just a simple matter of, oh, I like this company just this year. I mean, he has a whole long history over the past several years in this company and in this stock.

JARED BLIKRE: Andy, I got to tell you a funny story about Armand Hammer. His grandson, Armie Hammer, just featured in some magazine. And there was a quote in there that I remember starkly. One of the poor relatives, she said, I can't watch the show "Succession" because it reminds me too much of my family. But we've got to shift gears here. There's a climate change angle. What's going on there?

ANDY SERWER: Yeah, I think it's his great grandson, by the way, Jared.

JARED BLIKRE: Is it?

ANDY SERWER: But absolutely. Yeah, I mean--

DAVE BRIGGS: How about them apples?

ANDY SERWER: Just fascinating stuff, to quote Matt Damon. So, yeah, people say, well-- or they wonder, should I buy this stock because Warren Buffett's in it? Well, a lot of that has to do with what your take is on climate change. If you're someone who really believes in climate change, I wouldn't be buying Occidental Petroleum. I mean, sure, they're trying to offset their exposure to carbon, like the other oil companies are.

But if you really strongly believe in dieting, don't buy an ice cream store kind of thing, right? And so if that doesn't bother you, then maybe you should. I mean, it's a timeless question about investing in our time, you all, which is, should you just sit back and buy what Warren Buffett buys? Or maybe, you guys, to make it even simpler, just buy BRK.B or BRK.A. You probably could do a lot worse in life.

JARED BLIKRE: Andy, I would love to be able to buy one share of BRK-A. Thank you for joining us here today.