Subject: Tom Russo on BRK's OXY Bet
"Russo detailed one reason why Buffett may have poured more than $11 billion into Occidental Petroleum over the past 15 months.

The Berkshire chief may view his company's almost 24% stake in the oil-and-gas company ' excluding $10 billion of preferred stock and warrants to buy another $5 billion of Oxy's common stock ' as a hedge against higher energy costs, Russo said.

For example, a spike in oil prices would raise fuel costs at two of Buffett's biggest businesses, Berkshire Hathaway Energy and the BNSF Railway. However, the increases will now be partially offset by Occidental selling its oil for a higher price and collecting bigger profits ' especially as Berkshire owns enough of the fossil-fuel company to account for a proportional share of its earnings as its own.

Russo described Berkshire staking a claim to Occidental's "huge pool of oil" as a shrewd and unorthodox move. He compared it to Buffett's investment of "float," or the money left over after premiums are collected and claims are paid out by his insurance companies."

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