Energy sector-related exchange traded funds gained Tuesday after Warn Buffett’s Berkshire Hathaway’s latest regulatory filing revealed increased purchases of Occidental Petroleum Corp. (OXY) to near a threshold that would include the oil company’s earnings for its own.
On Tuesday, the Invesco Dynamic Energy Exploration & Production Portfolio (NYSEArca: PXE) gained 4.0%, the First Trust Energy AlphaDEX Fund (NYSEArca: FXN) rose 3.4%, and the John Hancock Multifactor Energy ETF (JHME) increased 3.0%.
Meanwhile, Occidental Petroleum shares jumped 4.6%. OXY makes up 5.9% of JHME’s underlying portfolio, 5.9% of PXE, and 4.9% of FXN.
Buffett’s Berkshire Hathaway Inc. stated it purchased another 1.94 million shares of Occidental Petroleum Corp and held a 19.4% position in Occidental worth $10.9 billion, Reuters reported.
Berkshire’s position in Occidental is just shy of the 20% ownership level that would allow the conglomerate to record its proportionate share of Occidental’s earnings or the so-called equity method of accounting.
Since Berkshire holds more than 10% of Occidental, the conglomerate is required to file with the SEC within two business days after additional purchases or sales of stock.
Berkshire CEO Warren Buffett has been increasing the company’s stake in Occidental since the position was first disclosed back in March. The company has rarely paid more than $60 per share for Occidental stock, and Barron’s calculates that Berkshire’s total cost for the majority of its stake is around $54 a share.
There are some market speculations that Buffett could outright buy all of Occidental, but the remaining 80% or so of the company would cost Berkshire around $60 billion at $80 a share.
Occidental’s share price, along with the broader energy sector, has enjoyed a stellar year as oil prices surged in the wake of Russia’s invasion of Ukraine and western sanctions on Moscow disrupting the normal flow of global crude oil.
Berkshire’s improving outlook on Occidental comes after CEO Vicki Hollub outlined her vision for the company on a February earnings call where she vowed to optimize the company’s operations, pay off debt, raise dividends, restart stock buybacks, and maximize long-term cash flows, Markets Insider reported.
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