Even people who have never invested a dime in the stock market know who Warren Buffett is.
As one of the most prolific stock traders on the planet…
It’s easy to see how he’s gained fame – he’s been one of America’s most predominate billionaires for decades.
He’s been trading stocks since childhood…
And his wealth of knowledge has become his biggest advantage when it comes to discovering new and winning trades.
However, at 92-years-young…
Does Oracle of Omaha still have what it takes?
Let’s take a look at one of his new discoveries…
And we’ll see if it passes the test of modern-day trading.
Let’s be honest…
Attractive investment opportunities have been hard to come by in today’s harrowing economic climate…
Inflation, recession talk and higher interest rates are beating us over the head on a daily basis – and it has made the task of finding winning trades (for some) a tough one.
GorillaTrades doesn’t have that problem…
Our trading matrix is based on data and numbers – and has nothing to do with many of the other factors that some stock analysts use to pick prospective recommendations.
But we’re not here to talk about GorillaTrades…
We’re here to talk about Warren Buffett.
What makes him so intriguing is his contrarian outlook…
While investors have been pulled out of the market over the first half of 2022 – Buffett has dropped BILLIONS of dollars over the past six months to buy just ONE stock.
Yes, he’s spent billions to purchase an almost 20% stake in of Occidental Petroleum (OXY).
Even more – he’s about to put billions MORE into OXY because he just won approval to buy the controlling interest (or half) …
And when Buffett makes that kind of a purchase – we should take a good hard look.
Even though fracking has been frowned upon by many of today’s most prevalent politicians – Buffet seems to know something we don’t…
OXY is a leader in this industry – as it is one of the largest shale producers in the Permian Basin, with up to 80% of its hydrocarbon production based in the US.
This gives Buffett a heavy foothold in the industry.
Which is good…
Because while there’s been transition to “green” energy in the works – it won’t actually happen for many years.
That means the world still needs oil and gas – and Buffett is ready to profit from that demand.
Which, when you look at OXY’s holdings – you’ll see that it owns a large and continuous shale acreage in the deepest shale business in America…
And not only is the company one of the largest oil producers in the Permian – but it’s also one of the most cost-efficient companies in the world.
On top of its holdings and production levels…
OXY has solid management behind it.
Buffett feels the company’s CEO was “running the company the right way” – which means he believes that she was prioritizing profits over production.
The management team has also said it has three objectives for its free cash flow: reducing its debt, paying dividends, and buying back shares…
And all three are music to Buffett’s ears.
One thing to remember about Buffett is that he only buys when he thinks there is greater value to be had longer term.
The best way to value an oil and gas company is to sum up the net asset value (NAV) of all its assets…
When you take that into consideration, OXY is underpriced – as he feels the same as many analysts do: long-term oil prices will stay higher for longer at $60 a barrel or more.
So, does OXY pass the “smell test?”
I would say so…
Buffett’s got a $38 billion exposure to the energy sector through both Chevron (CVX) and OXY – which should speak volumes about his optimism on long-term oil prices.
In this case, I agree with Buffett’s bullish view of oil.
It must makes sense, right?
Now, Buffett’s not everybody’s cup of tea…
However, you can’t argue with his track record – especially during times of economic downturns.
So, does the Oracle of Omaha still “got it?”
Yes…
Absolutely.
I can only hope this Gorilla is as skilled and sharp when I get into my 90’s…
Many decades from now.
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” – Warren Buffett
