According to GuruFocus’ guru portfolio data, a Premium feature based on 13F equity portfolio filings, gurus that followed Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) into Occidental Petroleum Corp. (OXY, Financial) include Smead Value Fund (Trades, Portfolio), Ronald Muhlenkamp (Trades, Portfolio)’s Muhlenkamp & Co., Dodge & Cox, Prem Watsa (Trades, Portfolio)’s Fairfax Financial Holdings Ltd. (TSX:FFH, Financial) and Stanley Druckenmiller (Trades, Portfolio)’s Duquesne Family Office.
Berkshire further fuels Occidental position
The Omaha, Nebraska-based insurance conglomerate revealed in a Securities and Exchange Commission Form 4 filing that it purchased 3,666,714 shares of the Houston-based energy giant in a series of transactions last Thursday and on Monday, increasing the position to 211,707,119 shares or approximately 23.5% of the company’s total shares outstanding. The total value of the purchases is $216.213 million. The filing also shows that Berkshire has over 83 million warrants to purchase extra shares of Occidental.
As of the December 2022 13F equity portfolio filing, Occidental represents Berkshire’s seventh-largest holding with an equity portfolio weight of 4.09%.
Shares of Occidental closed at $62.21 on Tuesday, up approximately 4.29% from the previous close of $59.65. The stock is modestly overvalued based on its price-to-GF Value ratio of 1.21.
Company fundamental overview
The energy giant has a GF Score of 75 out of 100 based on a momentum rank of 8 out of 10, a profitability rank of 7 out of 10, a GF Value rank of 3 out of 10 and a rank of 5 out of 10 for growth and financial strength.
Occidental’s high momentum rank is driven by a 12-1 month momentum index of 0.43, which outperforms approximately 61% of global competitors. The company’s 14-day relative strength index of 48.49 suggests the stock is modestly oversold.
Company financial strength overview
Occidental’s financial strength ranks 5 out of 10 on the back of a modest Altman Z-score of 2.29 and a debt-to-equity ratio that underperforms approximately 62% of global competitors.
While the company has a solid interest coverage ratio of 13.27, the ratio outperforms just over 54% of global energy companies. Despite this, the company’s debt-to-Ebitda ratio of 0.94 outperforms over 64% of global competitors.
Company profitability overview
Occidental’s profitability ranks 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 out of 9 and a net profit margin that outperforms more than 85% of global competitors.
The company’s high Piotroski F-score is driven by several positive indicators, including increasing return on assets, lower leverage, increasing gross profit margins and asset turnover over the past year.
Occidental’s gross margin has increased by approximately 3.70% per year over the past five years. Buffett and Charlie Munger (Trades, Portfolio)’s key investing criteria when looking for good companies include increasing profit margins and low debt when growing business operations.
Several other gurus have built positions in Occidental
Based on 13-F filings, 10 gurus purchased shares of Occidental during the fourth quarter of 2022.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Smead
Managed by lead portfolio manager William Smead and co-portfolio manager Cole Smead, Smead Value Fund (Trades, Portfolio) seeks long-term capital appreciation by investing in a concentrated portfolio of stocks that have strong competitive advantages, high profitability, low valuation, shareholder-friendly management, high free cash flow, strong balance sheet and high insider ownership.
As of November 2022, Smead owns 5,670,251 shares of Occidental, giving the position 9.68% equity portfolio weight. The firm purchased 794,346 shares of Occidental during the fourth quarter, boosting the position by 16.29%.
Following the firm’s closure of its Continental Resources Inc. (CLR, Financial) holding, Occidental leaped into Smead’s top holding as of the fourth quarter.
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Muhlenkamp
Muhlenkamp & Co. invests with the belief that over time, a company’s share price reflects the value of the underlying business. The firm looks for companies with solid balance sheets and trade at a price-earnings ratio that is less than the company’s return on equity.
As of Tuesday, Occidental has a price-earnings ratio of 4.88, which is near a 10-year low. Likewise, the company’s return on equity is 26.22% as of the fourth quarter of 2022.
As of December 2022, Muhlenkamp & Co. Owns 232,926 shares of Occidental, giving the position 6.22% equity portfolio weight. The position represents the guru’s third-largest holding.
Dodge & Cox
Dodge & Cox employs a team research approach in making investment decisions. The firm seeks long-term capital appreciation by investing in stocks in which valuations do not reflect the company’s long-term earnings and cash flow prospects.
As of December 2022, the firm owns 92,957,224 shares of Occidental, giving the position 4.02% equity portfolio weight. The position represents the firm’s second-largest holding.
Fairfax Financial
Led by Canadian guru Prem Watsa (Trades, Portfolio), Fairfax Financial applies Berkshire’s concept of investing using insurance float. Fairfax emphasizes a value investment philosophy, seeking to invest its assets on a total return basis.
As of December 2022, Fairfax owns 921,500 shares of Occidental, giving the position 1.57% equity portfolio weight. The position represents the firm’s seventh-largest holding.
Druckenmiller
A former partner of George Soros (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio) founded Duquesne in 1981 and converted the firm into a family office in 2010. The firm applies a top-down approach that combines long and short positions in all types of securities, including stocks, bonds, currencies and futures.
As of December 2022, Duquesne owns 420,580 shares of Occidental, giving the position 1.31% equity portfolio weight.
