🥃 New position opened.
Occidental Petroleum ($OXY (+5,16%) ) has been on my list for some time, partly because Warren Buffett has been buying shares for about 2 years and now owns almost 30% of the company. He has also said that he would like to increase his stake to up to 50%.
It is also interesting that Li Lu, who is regarded as an extremely talented investor, is now also investing in Occidental. Li Lu made a name for himself when, during his studies in the USA, he somehow made a million dollars with his student loans on the stock market. He later managed money for Charlie Munger, Buffett's long-time business partner, among others, for decades, particularly in Asian markets. He is regarded as someone who only invests in companies that he really believes in and really holds them as a long-term investor. The fact that he is now backing Occidental is therefore a strong sign.
At the moment, the majority of Occidental's cash flow is being used to reduce its high level of debt. The company has the highest debt among the major oil and gas companies, but this is scheduled to be significantly reduced by the end of 2025 or 2026. Once this has been achieved, around 10% of the cash flow could flow directly to shareholders through dividends and share buybacks.
There is also an exciting aspect to Occidental: the company is a leader in the field of carbon capture, utilization and storage (CCUS). Occidental is one of the few companies that is actively involved in the development of technologies to combat climate change. They are focusing on "Direct Air Capture", a technology designed to remove carbon dioxide directly from the atmosphere. This CO2 can either be stored or reused for industrial purposes.
Of course, I don't know exactly how all this is supposed to work, but I've invested some time that I don't really have at the moment and tried to get as much of an overview as possible.
In any case, Occidental is planning to build the world's largest "direct air capture plant" 😅 in the USA, with the aim of removing millions of tons of CO2 every year. This technology could play a decisive role in reducing greenhouse gases in the long term.
Interestingly, OXY can also use the captured CO2 for enhanced oil recovery, which allows the company to make double use of it: they improve their oil production and contribute to reducing CO2 at the same time.
Many investors have not yet fully recognized this future potential of the CO2 business, but it could prove to be an important growth driver for Occidental in the coming years.
For dividend hunters, the current dividend yield of approx. 1,55% perhaps a little low, as the company only pays out around 20% of its profits. However, significantly more could flow back to shareholders in the future once the debt has been reduced. (e.g. through buybacks, which I particularly like! 🙌)
I am curious about your opinion, I have been talking about Occidental in my circles for the last few days and surprisingly I have heard from many that they are also invested or at least know someone/community's who are also talking about it.
- GERIT 🐅
