In an interview on Monday, Berkshire Hathaway Chairman Warren Buffett revealed his recent significant increase in his stake in Western Oil, saying he spent $4.5 billion on 91.2 million shares in Friday trading, worth more than $5 billion at current share prices.
The famous investor made the decision to increase his stake in the company after reading the minutes of the western oil company's fourth-quarter earnings call on February 25.
"I read every word and said, 'this is what I'm going to do,' she's running the company in the right way," Buffett said, referring to Vicki Hollub, CEO of the Western Oil Company.
During the earnings call, Holub touted Western oil companies' operating earnings, debt repayments, dividend increases and a focus on creating long-term, sustainable free cash flow.
The company's improved outlook, coupled with a surge in energy prices caused by the conflict between Russia and Ukraine, has pushed its shares up 70 per cent this year.
"We start buying on Monday and buy as much as we can," Buffett said. "
According to Buffett's comments and documents received by the Securities and Exchange Commission (SEC), Berkshire bought 29.8 million Western oil shares by the close of trading last Tuesday and then bought another 61.4 million shares over the next three days.
Mr. Buffett said he called Mr. Hollow a minute after the market closed on Friday to tell her that he had bought shares in the company.
Before that, Buffett's Berkshire had preferred shares worth $10 billion in Western Petroleum and warrants to buy 83.9 million common shares at an exercise price of $59.62 per share. If the share price of Western oil companies is above that level, Berkshire can exercise its warrants and sell the shares at a profit.
In 2019, Berkshire offered $10 billion to Western oil companies to buy Anadarko Petroleum, in exchange for preferred shares and warrants for Buffett and his team.
Berkshire earns about $800m a year from the arrangement, thanks to the 8 per cent annual dividend on these preferred shares.
Last week, Carl Icahn, a billionaire investor known as the "lone wolf of Wall Street", sold his last batch of shares in Western oil companies and lashed out at the Holub-Buffett deal in 2019.
Mr Icahn said at the time that Buffett had "squeezed out" the rouble and that the negotiation was like "taking candy from the baby".
Edit / charlie