Warren Buffet Just Pulled Off Another Goldman Sachs Deal
Warren Buffett got into the investment at the age of 11 when a paper route allowed him to save enough money to buy some farmland. By the time Buffett was 15, he had net worth of about $6,000. By the time he was 30 his net worth was $1MM and by the time he was 56 his net worth was $1 billion. And well, you know how the rest of the story.
Because Warren is so successful, he has a cult following that attempts to emulates his trading style. And if you want to emulate Warren, like his cult following, you have to read books about Warren:
The Warren Buffett CEO, by Robert P. Miles
The Snowball: Warren Buffett and the Business of Life, by Alice Schroeder
Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013, by Carol J. Loomis
The Warren Buffett Way, by Robert G. Hagstrom
The Essays of Warren Buffett: Lessons For Corporate America, by Warren Buffett & Lawrence Cunningham
Another way to emulate Warren’s success is to just buy companies that pay dividends and buy back their stock. For example, Wells Fargo and Bank of America are set to bring in more than $1.5 billion in dividend income for Buffett over the next year. That $1.5 billion is almost 2% of his net worth.
Probably the best way to emulate Warren’s success is to identify when stocks are on sale. During the Great Recession, Warren gave Goldman Sachs $5 billion to help keep the company afloat. This cash on hand gave Warren the ability to write his own ticket. Between the $1 billion in dividends, the $5.5 billion repayment check, and the $2 billion or more in profits from the warrants, Warren got almost a 70% return on his investment.
Fast forward to 2020 and he is about to pull off another Goldman Sachs.
Occidental Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States and internationally.
Occidental which had a very good balance sheets, but after it acquired Anadarko earlier this year, it has one of the worst in the industry now. Despite creating a $100+ billion global energy leader with 1.3 million barrels of oil equivalent per day of production. Recently due to the collapse in oil price, Occidental cut its dividend for the first time in 30 years to conserve cash to cover debt incurred during the acquisition of Anadarko.
With oil prices expected to remain depressed, Warren just pulled another Golman Sach deal.
Warren Buffett's Berkshire Hathaway Inc <BRKa.N> agreed to take Occidental Petroleum Corp <OXY.N> common shares in lieu of a first-quarter cash dividend, helping relieve the strain on the oil giant's balance sheet.
Berkshire can immediately sell the shares, according to a regulatory filing on Wednesday, but has not indicated its intent. A sale would bring in less than $230 million at Occidental's current price.
The oil price drop and Anadarko acquisition left Occidental with about $40 billion in debt and dwindling means of covering its costs. Last month it slashed its 2020 budget and cut its annual dividend to 44 cents a share from $3.16.
Berkshire companies hold around 4.7% of Occidental common shares, according to a Wednesday filing.
Like the banks I think Occidental is too big to fail. So if prices get to the monthly demand at $6, I will have to get my Warren Buffett on as well.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo