Subject: Re: More OXY. Less Liberty.
Though certainly a useful number to know, unlike some holdings a simple average price per share isn't a great guide to how well they have done so far. I think in the case of Berkshire's investment, you'd want to include all the moving parts, which gets complicated very quickly.
* The dividends are not inconsequential since March 2022, so you'd also want to estimate the after-tax dividends received to date.
* Add the after-tax benefit of the 8% interest on the preferred to date
* The in-the-money mark-to-market profit on the warrants, less a tax provision
* The premium received on the fraction of preferred stock that was redeemed to date
* The time-weighted amount of money put at risk to date: e.g., some recent purchases are profitable despite tying up money for only a few days, and the cost to exercise the warrants has not yet been disbursed.


Yes, it would be a complicated spreadsheet.

But if someone wants to do it, note also that Occidental has repurchased about 12% of Berkshire's $10b worth of preferred shares, at a 10% premium, as they are obliged to do if they pay more than $4 per share in dividends in any given year, in an amount matching the excess above $4.

I'm guessing that this investment, as with most Berkshire investments, has underperformed the S&P in the last few years, probably by a pretty wide margin. The S&P 500 was under 3000 in August 2019, and it's now bumping up against 5500. Occidental was at about $42 on the initial purchase of the preferred shares, and has been at around $60 for 2 years now. But there was a 2-year period, roughly March 2020 to January 2022, when Occidental shares could be had for under $30, and as low as $20. Buffett unfortunately didn't buy any during this time, but did start buying ordinary shares in Q1 of 2022, buying 136m shares, half the current position, at prices somewhere between $33 and $60, so you never know.

Note 5 (p. K-86) of this year's annual report indicates that the carrying value of the Occidental stake, on Dec 31st, was $15.4b, whereas the fair value was $14.6b, and that, in its opinion, "the recognition of impairment charges in earnings were [sic] not required." My understanding of this is that this means the investment is actually underwater. Is that correct? If so, no need for complicated calculations to conclude that, so far, this investment is underperforming.

dtb