Warren Buffett gets permission to buy up to half of Occidental

Warren Buffett’s Berkshire Hathaway on Friday received regulatory approval to purchase up to 50% of oil giant Occidental Petroleum.

Shares of Occidental jumped 7% on the news, pushing its 2022 gains to more than 140%.

On July 11, Berkshire filed an application with the Federal Energy Regulatory Commission to buy more of the oil company’s common stock in secondary market transactions.

The conglomerate has already increased its Occidental stake drastically this year. Berkshire currently owns 188.5 million shares of Occidental, equal to a 20.2% position. It surpassed a key threshold where Berkshire could record some of the oil company’s earnings with its own, potentially adding billions of dollars in profit.

Berkshire also owns $10 billion of Occidental preferred stock, and has warrants to buy another 83.9 million common shares for $5 billion, or $59.62 each. The warrants were obtained as part of the company’s 2019 deal that helped finance Occidental’s purchase of Anadarko. The stake would rise to nearly 27% if Berkshire exercises those warrants.

Occidental has been the best-performing stock in the S&P 500, benefitting from surging oil prices.

Buffett’s growing bet on Occidental has inspired a legion of small investors to follow suit, making it a favorite retail stock this year, according to data from VandaTrack.

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