Berkshire Hathaway raises Occidental Petroleum stake above 20%

Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc. bought more shares of Occidental Petroleum Corp (NYSE:OXY), exceeding the oil company's 20% stake that would allow it to book some of its earnings into its own shares and potentially add billions of dollars in profits.

In a legal filing Monday night, Berkshire said it paid about $391 million for about 6.7 million Occidental shares between August 4 and August 8. Those purchases gave Berkshire 188.4 million Occidental shares, or 20.2% of the reported outstanding shares worth $11.3 billion. The 20% stake will allow Berkshire to report its proportionate share of Houston-based Occidental's earnings along with its operating results using the so-called equity method of accounting. Berkshire could still argue that its accounting for Occidental should remain unchanged because its stake is passive. Analysts expect Occidental to post an average profit of $10.5 billion this year, according to Refinitiv I/B/E/S. Buffett's company also owns $10 billion of Occidental preferred stock, which helped finance the 2019 acquisition of Anadarko Petroleum (NYSE:APC), and warrants to buy another 83.9 million common shares for $5 billion. Some analysts think Omaha, Nebraska-based Berkshire could eventually bid for all of Occidental. Buffett's assistant and Occidental did not immediately respond to a request for comment outside market hours. Berkshire posted an operating profit of $16.3 billion in the first half of this year. Berkshire uses the equity method for food company Kraft Heinz (NASDAQ:KHC) Co, in which it holds a 26.6% stake, and truck stop operator Pilot Travel Centers, in which its 38.6% stake is expected to rise to 80% next year. In contrast, Berkshire accounts for its 20.2% stake in American Express Co (NYSE:AXP) on a normal basis, limiting its ability to make a significant impact. Occidental shares closed at $60.04 on Monday. The share price has more than doubled this year, benefiting from rising oil prices following Russia's invasion of Ukraine. Berkshire owns stocks in dozens of companies, including BNSF railroad, Geico car insurance and various energy businesses, and oil company Chevron Corp (NYSE:CVX), which it closed June with $23.7 billion in shares.