Warren Buffett’s Berkshire Hathaway won approval from US regulators to buy as much as 50 per cent of Occidental Petroleum after spending months snapping up its shares.
Occidental’s stock had its biggest gain in five months.
The Federal Energy Regulatory Commission said in a filing published on Friday that Berkshire’s proposed stock purchases are “consistent with the public interest”.
Berkshire applied for the authorisation on July 11, the FERC said.
Berkshire has spent this year wagering more on Occidental after first making a bet on the Houston-based oil company three years ago.
Earlier this month, Berkshire reported that it now holds 188 million shares of Occidental’s common stock, a little more than 20 per cent of its 931 million shares outstanding.
“No question Buffett goes to 50 per cent from here,” said Bill Smead, who manages $4.8 billion at Smead Capital Management and is a top 20 shareholder in Occidental and also owns Berkshire stock.
“This is looking more and more like the Burlington transaction where he ended up buying the whole shooting match.”
Mr Buffett built up a significant stake in railroad Burlington Northern Santa Fe, now known as BNSF, before agreeing in late 2009 to buy the railroad.
“The approval of this filing allows Berkshire from a FERC perspective to accumulate up to 50 per cent ownership of Oxy’s common shares, which is necessary because we own assets subject to FERC regulation,” Occidental spokesman Eric Moses said in an emailed statement.
“The prior FERC approval threshold was at 25%.”
In 2019, Mr Buffett aided Occidental chief executive Vicki Hollub’s pursuit of Anadarko Petroleum by agreeing to invest $10bn in Occidental, a pact that included both preferred shares and warrants.
Those warrants allow Berkshire to buy as many as 83.86 million shares in Occidental at a price of $59.62.
At today’s stock price, the billionaire investor would turn a profit of more than $900 million by exercising the warrants.
This year, Mr Buffett praised Ms Hollub’s leadership, a sign that the billionaire investor was all-in on Occidental.
That stirred up speculation that Berkshire, with more than $105bn in cash on hand at the end of June, could seek to buy more stock.
On March 7, CNBC’s Becky Quick said on Squawk Box that Mr Buffett told her that Berkshire started buying on February 28 “and we bought all we could”.
Mr Buffett decided to start making the purchases after reading a transcript of Occidental’s February 25 earnings conference call.
“I read every word, and said this is exactly what I would be doing,” Mr Buffett told Ms Quick.
“She’s running the company the right way.”
Occidental is the best-performing stock in the S&P 500 this year by some margin, rising 146 per cent as the index declined 11 per cent, driven by Mr Buffett’s steady buying and high oil prices.
The company’s shares climbed 9.9 per cent in New York trading, their biggest one-day increase since March 4.
Ms Hollub has made aggressive moves to boost returns to shareholders this year by reining in capital-intensive production growth in favour of dividends and share buybacks for investors.
She’s also eliminated much of the $30bn of debt the company took on buying Anadarko.
Occidental received a further boost this month with the passing of the Inflation Reduction Act, which increased tax credits for carbon capture, a technology in which the company is a leading player.
Ms Hollub hailed the bill as “very positive”.
Occidental plans to make capturing carbon from the air a key part of meeting its ambition to be net zero by mid-century, one of the most aggressive plans of any US major oil company.
The Occidental stake that Berkshire reported earlier this month surpassed a key level that could entail new quarterly disclosures and a boost to the company’s earnings.
According to auditor PricewaterhouseCoopers, a company with a stake in another firm as large as Berkshire has in Occidental exercises “significant influence” over that business, and may have to include earnings from that investment in its own results under the so-called equity method of accounting.
Occidental wouldn’t be Berkshire’s first bet large enough to merit the accounting approach.
The company does it for its roughly 27 per cent stake in Kraft Heinz, for example. But while Berkshire does hold 20.2 per cent of American Express, it’s struck agreements with the company and the Federal Reserve that limit the influence it can exercise over the stock.
Because of that, Berkshire doesn’t follow the equity method in that case.
UAE currency: the story behind the money in your pockets
BMW M5 specs
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Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
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THREE
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What is graphene?
Graphene is a single layer of carbon atoms arranged like honeycomb.
It was discovered in 2004, when Russian-born Manchester scientists Andrei Geim and Kostya Novoselov were "playing about" with sticky tape and graphite - the material used as "lead" in pencils.
Placing the tape on the graphite and peeling it, they managed to rip off thin flakes of carbon. In the beginning they got flakes consisting of many layers of graphene. But as they repeated the process many times, the flakes got thinner.
By separating the graphite fragments repeatedly, they managed to create flakes that were just one atom thick. Their experiment had led to graphene being isolated for the very first time.
At the time, many believed it was impossible for such thin crystalline materials to be stable. But examined under a microscope, the material remained stable, and when tested was found to have incredible properties.
It is many times times stronger than steel, yet incredibly lightweight and flexible. It is electrically and thermally conductive but also transparent. The world's first 2D material, it is one million times thinner than the diameter of a single human hair.
But the 'sticky tape' method would not work on an industrial scale. Since then, scientists have been working on manufacturing graphene, to make use of its incredible properties.
In 2010, Geim and Novoselov were awarded the Nobel Prize for Physics. Their discovery meant physicists could study a new class of two-dimensional materials with unique properties.
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
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Transmission: 10-speed auto
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UAE currency: the story behind the money in your pockets
The specs
Engine: 2.0-litre 4cyl turbo
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Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
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Price: From Dh117,059
Sunday's fixtures
- Bournemouth v Southampton, 5.30pm
- Manchester City v West Ham United, 8pm
Infiniti QX80 specs
Engine: twin-turbocharged 3.5-liter V6
Power: 450hp
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Available: Now
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
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Transmission: 8-speed auto
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Company info
Company name: Entrupy
Co-founders: Vidyuth Srinivasan, co-founder/chief executive, Ashlesh Sharma, co-founder/chief technology officer, Lakshmi Subramanian, co-founder/chief scientist
Based: New York, New York
Sector/About: Entrupy is a hardware-enabled SaaS company whose mission is to protect businesses, borders and consumers from transactions involving counterfeit goods.
Initial investment/Investors: Entrupy secured a $2.6m Series A funding round in 2017. The round was led by Tokyo-based Digital Garage and Daiwa Securities Group's jointly established venture arm, DG Lab Fund I Investment Limited Partnership, along with Zach Coelius.
Total customers: Entrupy’s customers include hundreds of secondary resellers, marketplaces and other retail organisations around the world. They are also testing with shipping companies as well as customs agencies to stop fake items from reaching the market in the first place.
UAE currency: the story behind the money in your pockets
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The%20specs
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The Light of the Moon
Director: Jessica M Thompson
Starring: Stephanie Beatriz, Michael Stahl-David
Three stars
Company%20Profile
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The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
