REUTERS / Rick Wilking
Warren Buffett’s Berkshire Hathaway accumulated a $ 1.2 billion gain on its investment in Chevron in less than 10 weeks.
The investor’s famous company held a 2.5% stake in the oil and gas group worth $ 4.1 billion at the end of December, it revealed in a regulatory document last month. Chevron’s share price has risen 29% since then, as oil prices rebounded, bringing the value of Berkshire’s stake to $ 5.3 billion.
Berkshire started buying Chevron shares in the third quarter of 2020. It granted regulatory permission not to include the shares in its 13-F portfolio update for that period, as it was still building the position.
The company bought 44.3 million shares of Chevron in the third quarter, and another 4.2 million shares in the last quarter, it revealed in documents last month. Energy shares were among their top 10 market share by the end of 2020, Buffett said in his last letter to shareholders.
Buffett’s decision to support Chevron is paying off so far, but it is still somewhat surprising. After all, Buffett expressed doubts about the prospects for the oil sector at Berkshire’s annual meeting last year, after his painful bet on Occidental Petroleum.
“If you are a shareholder in Oxy, or any shareholder in any oil producing company, you will join me in making a mistake so far in terms of where oil prices have gone,” he said. “Who knows where they will go in the future?”
Buffett also intervened to help Occidental defeat Chevron in a bidding war for Anadarko Petroleum in 2019. His subsequent bet on Chevron suggests that there was no bad blood left from the confrontation.