Warren Buffett’s Shrewdest Big Bet Since Making Billions on Apple
Warren Buffett, the legendary investor, is known for his shrewd investment strategies and successful bets in the market. While many were surprised by Berkshire Hathaway’s sale of 10 million Apple shares in the fourth quarter of 2023, it’s important not to read too much into this move. Apple still remains the largest holding in Berkshire’s portfolio, and Buffett has previously expressed his admiration for the company, calling it “a better business than any we own.”
However, Buffett is now making an aggressively buying another stock, and it could potentially be his shrewdest big bet since making billions on Apple.
Buffett’s Big Zig
Buffett has always advised investors to be “fearful when others are greedy, and greedy when others are fearful.” He is now practicing what he preaches by buying shares of Occidental Petroleum (NYSE: OXY) in large quantities. This move goes against the conventional wisdom that fossil fuels will decline in demand with the rise of renewable energy.
Buffett’s belief is that more oil will be produced in the future, rather than less. He has wagered a significant amount of money on this proposition, with Berkshire Hathaway currently owning a stake in Occidental Petroleum worth close to $14.9 billion. This makes it the sixth-largest position in Berkshire’s portfolio.
Occidental’s Lottery Ticket
Occidental Petroleum is betting heavily on direct air capture (DAC) technology, which aims to remove carbon dioxide from the air and store it underground. In 2023, Occidental acquired Carbon Engineering, a leader in developing DAC technology, and is constructing the billion-dollar Stratos plant in West Texas, which will be the largest DAC facility ever.
The potential of carbon capture technology is enormous, with ExxonMobil estimating it to be a $4 trillion market by 2050. Occidental’s CEO, Vicki Hollub, believes that DAC could give new life to the oil and gas industry. Buffett seems to be fully on board with Occidental’s focus on DAC, praising Hollub for her competence and understanding of the industry.
Buffett’s Investment in Oxy
Buffett’s aggressive buying of Occidental stock is expected to continue. Berkshire Hathaway has regulatory approval to purchase up to 50% of the oil company, and its current stake stands at a little over 28%. While Buffett may never like Occidental as much as he does Apple, his investment in Oxy could turn out to be one of his best major bets since his investment in Apple eight years ago.
For investors considering Occidental Petroleum, it’s important to do thorough research and consider all factors before making any investment decisions.
Note: The original article was published by The Motley Fool.