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버핏의 버크셔해서웨이가 옥시덴털페트롤리엄(OXY) 지분을 약 17.4%(주식 약 1.634억 주, 평단 약 53~60달러)까지 늘린 것을 근거로, OXY가 60달러 부근에서 지지선을 형성한다고 주장. 버크셔의 추가 매수 가능성(20% 도달 시 회계처리 변화, 전체 인수 가능성 등)과 OXY의 30억 달러 자사주 매입 계획이 주가 하방을 받쳐준다는 논리. 사업 구조는 매출 대부분이 상류(Upstream) 석유·가스 생산이며, 생산지는 퍼미안 분지와 멕시코만 중심(약 60%)으로 북미 비중이 약 80%라고 설명. 투자 전략으로 2024년 1월 만기 60달러 현금담보 풋옵션(매도)을 제시해 약 16% 수익률을 강조, 45~50달러 실질 매입가 옵션 조합도 소개. 퍼미안 분지는 수십 년 생산 여력이 남아있으나 셰일이라 유가에 민감하다고 평가. 영상 말미에는 유료 구독(패트리온) 홍보와 Abercrombie 분석 영상 언급.
다듬은 글
Warren Buffett keeps buying oil companies especially Occidental Petroleum but should you be following him into oxy I actually think that there's another opportunity here in the wake of Warren Buffett committing to this opportunity and that's what I'm going and let's dive right into it so you can see here here's a Baron's article where Berkshire now owns approximately 17.4 percent of Occidental Petroleum or oxy for short and they lifted their stake in the Energy company to almost 10 billion dollars according to a filing on Friday and we're in the long weekend right now and so Warren Buffett now holds or Berkshire Hathaway now owns approximately 163.4 million shares and their average price has been around 57 to 60 dollars per share for their latest purchases so effectively they really like oxy under sixty dollars per share and Diving a little bit deeper into this article you can see here that Buffett actually began buying Occidental earlier this year and Barons actually estimates that berkshire's total cost spaces for oxy is around 53 dollars per share which means that because the share price has come up as I believe that people are following Buffett into this name and also he's taking the shares off the people who are less optimistic over the name and so there's people who are more optimistic so they'd be willing to sell it for a higher price so the paper profit is approximately a billion dollars but I don't know if you could liquidate and generate that profit but the real issue here and this is sort of my thesis for the investment opportunity that I'm going to recommending the later half of this video is that the purchases have continued to feel speculation that Berkshire will add further to its stake and reach approximately 20 percent or potentially bid for the entire company and what this article is really getting at is that at 20 Berkshire would get a different accounting treatment and what I think that they're getting at there is the equity method of accounting for investment so I'm not going to bore you with exactly what the Equity method for treatment is but in the accounting world and this is my CPA hat coming on there's three ways that you can account for Investments the first one is just a Fair Value method that's how most Investments are accounted for when you own less than 20 there's the equity method when you own just a little bit more and then there's the full consolidation method when you own uh controlling interest in the company and so if you're interested you can look those up now here's the most interesting part of this play that I'm going to talk about at the back half of this video if you go back to here at the second last paragraph Occidental said in its earnings conference call in May that expected to begin a three billion dollar share repurchase program in the second quarter and so Occidental has not only been focusing on repaying its debt associated with its 2019 purchase of Anadarko Petroleum but now they're going to be using some excess Capital to buy up shares so they're committing to a three billion dollar share repurchase program at the same time where Berkshire Hathaway is also by buying up shares so there's a huge support for the shares I would say at least at that sixty dollar level well what does that mean well I personally think that you can sell cash secured puts at that 60 level and generate a pretty healthy yield if you weren't really interested in owning an oil but oxy is actually very interesting oil company so a lot of you guys may not know this but my experience is predominantly in the oil and gas space I worked in the Calgary team of an investment Bank on the equity research side and I actually spent a lot of time learning all sort of like the Upstream the Midstream and the downstream businesses for oil and I'll explain a little bit of it for you guys but what I really want to show you was oxy sort of business model so you can see here that one of their priorities for delivering cash to their investors is by maintaining their current level of production the second part is their konicha deleverage their balance sheet so in the near term they're gonna pay down five billion dollars of debt and reduce that net debt to 20 billion dollars and over the long term term they're going to continue to retire that debt as maturities come due and then when it comes to returning Capital they expect to continue the dividend payment so long as the WTI the west Texas intermediate uh oil prices over forty dollars per share and they've come recently committed to a three billion dollar share repurchase program and so where exactly does oxy fall like are they more of an upstream company are they more of a Midstream company are they more of a downstream company well you can see here that oxy is very much an upstream provider so you can see that 13 billion of their 2020 revenues were from the oil and gas space so that's the actual drilling they do have some chemical products now I don't know if that chemical products is a Midstream business or if it's a downstream business my guess would be that it's a Midstream business but they just separated for their own purposes so that's around four billion dollars of Revenue and then you can see that they have a small Midstream business of approximately two billion or 1.76 but you can see the significant majority of their revenue do come from the Upstream business so they are very much an upstream producer and so that leads to the question of where exactly are they producing and the reason why you want to know where they're producing is you want to gauge the health of the basins where they're producing from and so you can see here that their total fiscal year 2022 production is coming from just a few areas so 60 of their exposure is in the Permian and Gulf of Mexico I.E that Texas area gold basins or deposits a little bit more of their production is from the Rockies and then of course they have some International exposure but effectively what you're saying is that approximately 80 percent of the business overall is domestic in North America and 60 is from that Texas and Gulf of Mexico regions and so I want to dive a little bit deeper into that so when we think about the Permian Basin well we do have to get an idea is this is a basin that's been used for a long time and so what does this Basin still have left to drill and so scientists say that this is a giant play which of course straddles the border of Texas and New Mexico and I'll show you it on a map after but it's produced for about a hundred years and it likely has Decades of life left both economically and geologically but a lot of the drilling because it's a Shale play shales a little bit more expensive and so practically speaking it all depends on the oil prices in order to unlock the oil that's locked in that sort of shale rock there and you can see here this is sort of a map you guys are who are new to the oil space may not necessarily be aware of all the oil basins that exist in just the lower 48 states as it stands obviously you can see at the very top there's the Bakken so that's like that North Dakota play that's where a lot of the oil drilling was happening when the oil price sort of declined in 2015 just above that that's sort of like the Calgary Edmonton area so that's the area I was focusing on huge infrastructure built there a lot of those oil sands do come down using the Keystone Pipeline and other lines and they go down into the Gulf so that does happen notice on the bottom left that's your Permian Basin so you see how Texas straddles New Mexico so that's kind of that whole Permian Basin and then in the dark colors that's the current plays that are currently happening but the Basin is obviously larger and then a little bit further south you can see that that's the Gulf of Mexico so it straddles Mexico Louisiana Florida and so that's where uh 20 of oxy's drilling is and then I just wanted to point out on the top right oxy does not have exposure to the Utica and Marcellus but this is another big drilling area and so if you're looking to invest in the oil space you can see that the Marcellus and Utica is another place where a lot of drilling is happening so drilling is happening all throughout and then of course you can see in California in the far left you can see that there is also Drilling in the modern array and so there's a lot of drilling happening but just sort of wanted to show you exactly what their plays are their plays are the Permian which is the bottom left there and the very bottom the Gulf of Mexico and so what I was trying to get at is if Berkshire is buying up as many shares as they can 60 per share or lower and if they're gonna be putting more pressure on the shares as a company overall by buying up more shares with their three billion dollar repurchase which reflects approximately six percent of the overall market cap for the company so you have Berkshire vying for a significant amount you also have six percent of the company being purchased just by the company alone you have a lot of support at that maybe 60 dollar per share level and it's not like oil prices are going down anytime soon so you're going to have more support for that 60 per share level as the company continues to buy up even more shares as time goes on and so what I wanted to do is I wanted to look at sort of those cash secured put opportunities and you can see here I speculate that Berkshire aggressive purchases at under sixty dollars per share and oxy share repurchases commitments have put a bit of a floor on the share price which I estimate to be around 60 per share so at that sixty dollar per share area the January 19 2024 cashier puts are at the money right now because the share price is around sixty dollars per share and so that at the money amount yields 16 with a net purchase price under what Warren Buffett's Berkshire has been buying it at forty five dollars per share so if you want to own this company for under what Berkshire has been buying it at because you're a smaller investor you get access to tools that Berkshire doesn't have access to so you can actually do this so best case scenario you buy the shares for forty five dollars a share worst case scenario you get a 16 yield so no matter what you win now if you don't necessarily want to get exercised on the shares you can purchase it out of the money or you can sell the out of the money cash secured puts that'll generate a 13 yield on on the 50 exercise price and give you a net share purchase price of forty dollars per share or if you really believe that there's significant upward pressure on these shares you can sell this at approximately a 21.5 yield so that's in the money with a net purchase price of approximately fifty dollars per share now with when it comes to in the money you could also just buy the shares and sell covered calls so you can do the same thing it effectively works out to the same so up to you how you want to play it but the point that I wanted to make is there's some interesting opportunities I'm really liking the at the money play of sixty dollars and you get that 16 yield it really complements my portfolio and it's something that I look to deploy now look I'm looking to deploy six figures before the end of the year and so this is an interesting opportunity that complements my portfolio that doesn't really have much energy exposure right now back when the market declined in March of 2020 one of the bigger positions that I did take was midstreamers and oil drillers so Exxon Chevron Pember 9 Canada a few U.S pipeline companies are yielding around 20 I was buying into all those names because I just felt like oil was a huge opportunity back then and then subsequent to that I largely sort of like turned away from oil and I was looking at other types of opportunities but now I'm starting to sort of come back into it and at least complement the portfolio as a whole with some energy exposure and the reason why I was looking to diversify away from the oil business because I do believe that there's a lot more exciting opportunities in the market right now you can see here that there are 10 names trading under the 50 of their intrinsic value and I've sort of unlocked a few of them so you can see there's Alibaba and Best Buy there's 20 names trading between 50 and 75 percent of their intrinsic value you can see I've unlocked a few of those so you got Zillow alphabet HP Inc meta Dave and Busters and Canada Goose and every single name on this tracker has a full detailed model supporting the valuation which you can get to at the lower tier of the patreons where you can get access to all of the models and the other thing I don't really talk a lot about but I'm talking more about it recently is that every month at the higher tier of the patreons there is a live presentation with all of the patrons at that higher tier and my very best research is reserved for that call and there's always some exciting opportunities and we also live value companies if people decide that that's something that they want to have happen on the call and like I always say there's never any risk to you because if you decide to try it out and decide that it's not for you no problem message me in the app before you cancel and let me know that it's not for you and I'll completely refund the full first month subscription because that's how much I believe in the product not so much I believe in the research and that's how much value I do believe that you will get that I'm pretty much making a bet that you're not going to want to unsubscribe now with that said one of the names on the list was Abercrombie and I truly believe that that's a name that's really been one of those babies thrown out with the bath water and I made a full video analyzing that opportunity and you can get to that video right here
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