Occidental Petroleum: Warren Buffett Proves His Doubters Wrong Again

seekingalpha2023-08-19

Occidental Petroleum Corporation stock bottomed out in June. Despite reporting weak second-quarter earnings, the stock didn't crash. As such, I assess that the worst is likely over.Berkshire Hathaway ...

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Kennedy8
2023-08-19
Kennedy8
Long term stock OXY shouldn't be valued in short term.
- Kennedy8:
  长期投资的股票不应该在短期内估价。

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Despite reporting weak second-quarter earnings, the stock didn't crash. As such, I assess that the worst is likely over.Berkshire Hathaway ...</p>\n\n<a href=\"https://seekingalpha.com/article/4629625-occidental-petroleum-warren-buffett-proves-his-doubters-wrong-again\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B1XK9C88.USD","symbol_name":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","start_time":0,"source_url":"https://seekingalpha.com/article/4629625-occidental-petroleum-warren-buffett-proves-his-doubters-wrong-again","article_id":"2360841305","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/73562040/image_73562040.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2360841305","pubTimestamp":1692381621,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Occidental Petroleum Corporation stock bottomed out in June. 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Despite reporting weak second-quarter earnings, the stock didn't crash. As such, I assess that the worst is likely over.Berkshire Hathaway holds a 25% stake in Occidental Petroleum, bolstering investors' confidence in maintaining long-term exposure in OXY.Despite its relative premium, Occidental's robust execution added credence to Buffett's conviction about its high quality, justifying its premium valuation.I make the case why doubting Buffett's foresight isn't wise. Occidental's operating performance should improve sequentially in Q3. Coupled with more robust buying sentiments, OXY looks ready to recover.Comment and let me know whether you think my upgrade on Occidental Petroleum Corporation is timely.Chip Somodevilla Investors in leading integrated oil and gas company Occidental Petroleum Corporation (NYSE:OXY) didn't see its stock tumble, despite reporting a tepid second-quarter or FQ2 earnings release in early August. I have anticipated the bottoming of the energy sector (XLE) since June 2023, urging energy investors to accumulate as underlying oil futures (CL1:COM, CO1:COM) were consolidating. I last held a Hold rating (Neutral/Market Perform) on OXY, considering its premium relative to its peers (according to S&P Cap IQ data). Seeking Alpha Quant's \"F\" valuation grade corroborates my observation, suggesting that perhaps the \"Warren Buffett premium\" has been baked into investors' optimism. OXY has risen the ranks in Berkshire Hathaway's (BRK.A, BRK.B) public securities portfolio. According to the latest update, OXY accounts for a 4.1% stake, with Berkshire owning more than 25% of OXY's holdings. Therefore, the \"Warren Buffett put\" has worked remarkably well, as Occidental investors look forward to a bottoming of its operating performance in the first half. Occidental management shared its view that it considers Occidental shares as undervalued. As such, it expects to continue its share repurchase program, as Occidental has completed 40% of its current year authorization in the first half. The relatively weak oil prices could hamper its preferred stock buyback from Berkshire. However, crude oil futures have recovered well, as they recently re-tested their April 2023 highs. Moving forward, investors need to assess whether they are convinced of an ongoing recovery in underlying oil prices, as it's fundamental toward further redemption of the preferreds. Outgoing CFO Rob Peterson stressed that the company's \"ability to redeem preferred equity might require higher WTI prices than indicated by the forward curve.\" My assessment suggests that crude oil prices have likely bottomed out between March and June. While the recent re-test could face near-term volatility given the recent broad market weakness, I don't anticipate the futures falling back toward the lows in the first half of 2023. As such, it makes sense to expect Occidental's operating performance to improve sequentially in the third quarter, coupled with its robust production growth. The company emphasizes capital-efficient growth, capitalizing on its advantaged assets in the Permian and DJ Basins. Moreover, assigning Peterson to OxyChem corroborates my conviction that the company's carbon capture business is expected to gain traction. As such, I'm confident that OXY's buyers should view any pullback as an opportunity to gain more long-term exposure in its shares, bolstered by the confidence of the Oracle of Omaha. With the global economy not expected to shuffle into a debilitating recession, buying sentiments are expected to remain constructive. Therefore, I believe it's appropriate to assess where the buying opportunities for OXY could lie, anticipating a further recovery in the underlying energy markets. OXY price chart (weekly) (TradingView) Based on my analysis, I expect OXY to bottom out at the $60 level. Given my expectation of a bottoming of its operating performance in the first half, I don't expect OXY to revisit the March to June lows at the $55 level. I must highlight that OXY's strength and resilience have been remarkable, a testament to the confidence of Buffett. Going against the Oracle with a Sell/Bearish rating is not recommended, as he lifted his exposure in OXY. Given this week's mild pullback, I believe the opportunity to turn more constructive on Occidental Petroleum Corporation has arrived. Despite near-term volatility, I encourage buyers to use the pullback to gain more exposure into OXY, as it looks ready to stage a decisive breakout of its April 2023 highs. Rating: Upgraded to Buy. Please note that a Buy rating is equivalent to a Bullish or Market Outperform rating. Important note: Investors are reminded to do their due diligence and not rely on the information provided as financial advice. Please always apply independent thinking and note that the rating is not intended to time a specific entry/exit at the point of writing unless otherwise specified. We Want To Hear From You  Have constructive commentary to improve our thesis? Spotted a critical gap in our view? Saw something important that we didn't? Agree or disagree? Comment below with the aim of helping everyone in the community to learn better!","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":210407218335960,"gmtCreate":1692389329041,"gmtModify":1692389663290,"author":{"id":"3449466806849577","authorId":"3449466806849577","name":"Kennedy8","avatar":"https://static.laohu8.com/8d24894de9386722b28396c146e12209","vip":1,"hat":"https://static.tigerbbs.com/048415ce28efe522291a14d3d3db53be","crmLevel":2,"crmLevelSwitch":1,"idStr":"3449466806849577","authorIdStr":"3449466806849577"},"htmlText":"Long term stock OXY&nbsp;shouldn't be valued in short term.","listText":"Long term stock OXY&nbsp;shouldn't be valued in short term.","text":"Long term stock OXY shouldn't be valued in short term.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/210407218335960","repostId":2360841305,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":8076330,"gmtCreate":1697058802890,"gmtModify":1697058806638,"authorId":3449466806849577,"author":{"id":3449466806849577,"idStr":"3449466806849577","authorId":3449466806849577,"name":"Kennedy8","avatar":"https://static.laohu8.com/8d24894de9386722b28396c146e12209","vip":1,"crmLevel":2,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":210407218335960,"type":1,"supId":0,"prevId":0,"content":"长期投资的股票不应该在短期内估价。","text":"长期投资的股票不应该在短期内估价。","html":"长期投资的股票不应该在短期内估价。"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":1,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":false,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"laohu8","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2360841305"}