30 April 2019: Buffett lends Occidental $10 billion to win Anadarko
On April 30, 2019 Berkshire Hathaway agreed to invest $10 billion in Occidental Petroleum preferred stock, paying 8% a year plus warrants, to help Occidental outbid Chevron for Anadarko. Many thought Occidental overpaid. The deal was a classic Buffett structure: Berkshire got paid handsomely whether or not the acquisition worked. Years later Berkshire also became Occidental's largest common shareholder.
The lesson: Lending to an eager buyer can be better than being the buyer; structure matters as much as price.
What it meant for investors
$1,000 in Occidental at the start of 2020 → $1,098 today, vs $2,092 in the S&P 500.
We start the clock at the start of 2020, the first year in our price data after the event. That is 1.1 times the money, but $995 less than a plain index fund made over the same years.
What Occidental teaches: Paying top price for an acquisition with expensive financing leaves no margin of safety; timing a bet like that badly can scar a company for years.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $80.00 | $562 | $3,301 |
| 2018 | $74.00 | $608 | $2,519 |
| 2020 | $41.00 | $1,098 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Occidental? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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