Buffett/Berkshire - general news

[gfp]

1 minute ago, jbwent63 said:

All correct. In addition the preferreds are like debt. They have a high, non-deductible coupon, fixed repayment/redemption date (2029), they are just in a different bucket on the balance sheet according to GAAP. Not having to pay cash to redeem solves a problem for OXY allowing them to use those resources to pay back more of the Anandarko debt faster....another win for both parties.

 

 

I agree with all that except that the OXY prefs don't have a fixed repayment / redemption in 2029 - that's just the earliest they can repay them (at 105% of par) if they want to.  The only other way to partially cancel the preferred shares was that formula for excess dividends/repurchases over a trailing 4 quarter period but they aren't close to that now.

[jbwent63]

7 minutes ago, gfp said:

 

I agree with all that except that the OXY prefs don't have a fixed repayment / redemption in 2029 - that's just the earliest they can repay them (at 105% of par) if they want to.  The only other way to partially cancel the preferred shares was that formula for excess dividends/repurchases over a trailing 4 quarter period but they aren't close to that now.

My assumption was, given the high non-deductible dividend rate they would quickly look to refinance with cheaper paper as soon as they could. I understand it is the first time they can, but I believe they would be remiss in not doing so (unless the financial markets didnt allow them to refinance on favorable terms).

[Munger_Disciple]

Preferred is very different from debt. First it is equity on OXY BS. So not making an interest payment doesn't trigger bankruptcy. Second I believe OXY can make preferred interest payments in-kind in case of cash crunch unlike debt payments. Third, I don't think there is a due date on them though OXY is incentivized to retire them as early as possible (higher interest than debt that can't be deducted). 

 

This is exactly why Buffett always structured the investment as convertible preferred (or equivalently preferred with warrants attached) when he rescued several firms during GFC. He did the same thing with OXY. 

 

Whether OXY wants cash or retire the preferreds depends on how bullish Vicki is feeling I Guess. 

Edited October 1, 2025 by Munger_Disciple

[KPO]

3 hours ago, KPO said:

Well said. I think Berkshire is uniquely positioned to buy this at a reasonable price by giving on the preferreds.  If it’s an all cash deal without an auction, that’s a bad look for the OXY BOD. 

This article sums up my view of why the preferred stock makes sense here, at least from OXY’s perspective:  https://www.barrons.com/articles/berkshire-occidental-chemicals-buffett-b59ac190

[Munger_Disciple]

1 hour ago, KPO said:

This article sums up my view of why the preferred stock makes sense here, at least from OXY’s perspective:  https://www.barrons.com/articles/berkshire-occidental-chemicals-buffett-b59ac190

 

The article makes a good point about tax implications of cash sale by OXY; that it depends on the tax basis of Oxychem (which we don't know). If it is indeed a low tax basis asset, it does make more sense for the deal to be structured as a swap of preferred stock for Oxychem. 

[John Hjorth]

On 9/23/2025 at 10:42 PM, DooDiligence said:

Same mistake here. That coupled with the weed vs flower analogy is pretty much why I'm so concentrated now. I see new ideas and look at them with a jaundiced eye. I can feel the desire to buy and see that it rises for the wrong reasons.

 

Yes, Jeff [ @DooDiligence ],

 

Getting rid of the weeds and watering the flowers creates a propensity and tendency to concentration. I'm also much more concentrated today than I would ever dream of some years ago.

[jbwent63]

13 hours ago, Munger_Disciple said:

 

The article makes a good point about tax implications of cash sale by OXY; that it depends on the tax basis of Oxychem (which we don't know). If it is indeed a low tax basis asset, it does make more sense for the deal to be structured as a swap of preferred stock for Oxychem. 

Those of us who thought it would be a swap were mistaken. I didnt see the whole interview with the CEO on CNBC but she made it clear that paying off the debt was the goal, restarting a share repurchase program will happen, and they will start to build a cash reserve to take out the BRK preferreds in 2029.

 

The big win for BRK should be appreciation in the OXY common shares, hopefully beyond the warrant strike price before the preferreds are paid out (I think the warrants expire when that happens). Hopefully OxyChem will fit in well with Lubrizol (if that is the integration plan) and it throws off a lot of cash as well.

 

Not an elephant, but not a bad sized acquisition for Greg and Warren.

[Charlie]

Berkshire Hathaway to pay $9.7 billion for OxyChem, potentially Buffett's last big deal

https://finance.yahoo.com/news/buffetts-berkshire-hathaway-pay-9-112214473.html

 

Cheers!

Edited October 2, 2025 by Charlie

[gfp]

Warren is ice cold!  All cash.  No preferred no nothing.  

 

https://berkshirehathaway.com/news/oct0225.pdf

 

"

An Occidental subsidiary will retain OxyChem’s legacy environmental

liabilities, and Glenn Springs Holdings Inc. will continue to manage existing remedial projects for

that subsidiary"

 

Plus, it sounds like this is fully taxable and might only result in $8 Billion of after tax cash for OXY ...  Ice Cold warren

 

Here are the slides:

https://www.oxy.com/siteassets/investors/earnings/divestment-update-slides.pdf

 

Edited October 2, 2025 by gfp

[John Hjorth]

16 minutes ago, gfp said:

Warren is ice cold!  All cash.  No preferred no nothing.  

 

https://berkshirehathaway.com/news/oct0225.pdf

 

I personally have issues to understand what Berkshire here has bought with this transaction. It may be rooted in lack of knowledge about Occidential.There seems to me be almost no clarification by studying the Occidential Diverstment Slides. [How much yearly earnings are Occidential selling to Berkshire?]

[gfp]

19 minutes ago, John Hjorth said:

 

I personally have issues to understand what Berkshire here has bought with this transaction. It may be rooted in lack of knowledge about Occidential.There seems to me be almost no clarification by studying the Occidential Diverstment Slides. [How much yearly earnings are Occidential selling to Berkshire?]

 

I think I heard something like $800m pretax but it is highly cyclical.  

 

Q2 2025

[KPO]

1 hour ago, gfp said:

Warren is ice cold!  All cash.  No preferred no nothing.  

 

https://berkshirehathaway.com/news/oct0225.pdf

 

"

An Occidental subsidiary will retain OxyChem’s legacy environmental

liabilities, and Glenn Springs Holdings Inc. will continue to manage existing remedial projects for

that subsidiary"

 

Plus, it sounds like this is fully taxable and might only result in $8 Billion of after tax cash for OXY ...  Ice Cold warren

 

Here are the slides:

https://www.oxy.com/siteassets/investors/earnings/divestment-update-slides.pdf

 

Sort of stunned that Berkshire gets to keep the preferred and it’s all cash.  Seems a much better deal for Berkshire than OXY given the tax leakage and still owing Omaha a rich dividend.  Good for Buffett and Abel! 

[gfp]

11 minutes ago, KPO said:

Sort of stunned that Berkshire gets to keep the preferred and it’s all cash.  Seems a much better deal for Berkshire than OXY given the tax leakage and still owing Omaha a rich dividend.  Good for Buffett and Abel! 

 

OXY getting sold as people are like, "Wait, what??"

 

nobody takes advantage of that gentle old midwestern grandpa

[KPO]

2 minutes ago, gfp said:

 

OXY getting sold as people are like, "Wait, what??"

 

nobody takes advantage of that gentle old midwestern grandpa

He’s congenital, but ruthless. A good outcome for Berkshire shareholders. Will be interesting to see if this increases the likelihood of CVX or XOM to acquire OXY now that it’s more of a pure play O&G asset, and with a slightly cleaner leverage profile. 

[Xerxes]

25 minutes ago, KPO said:

He’s congenital, but ruthless. A good outcome for Berkshire shareholders. Will be interesting to see if this increases the likelihood of CVX or XOM to acquire OXY now that it’s more of a pure play O&G asset, and with a slightly cleaner leverage profile. 

No major will touch Occidental until that preferred is gone. And in any case the Exxon and Chevron already have their digestion with Pioneer and Hess. 

[Pellom]

I wouldn't be surprised if it rubbed Omaha wrong when Vicki publicly said she'd love for Berkshire to buy all of the company. It seems to go directly counter to their preference for people who love the job they're doing. 

 

Speculation on my part, but by buying this in cash, it seems they got their preferred piece of the total operation. 

[Eldad]

Sell the OXY common now please sir.

[Munger_Disciple]

Some ink in the press for Greg Abel: 

https://archive.ph/nYJji

[Malmqky]

1 hour ago, Eldad said:

Sell the OXY common now please sir.

 

+1

[gfp]

The history books are gonna have a field day with this stuff.  "just as the AI rocketship was taking off an aging Mr. Buffett doubled down on Rat Poison and Caustic Soda.  Much like his purchase of Acme brick and Justin cowboy boots at the height of the internet mania.  AI would go on to change the world in enormous ways, incinerating trillions of capital in the process.  Mr. Abel continued to sell them electricity..."

 

[Hektor]

38 minutes ago, gfp said:

The history books are gonna have a field day with this stuff.  "just as the AI rocketship was taking off an aging Mr. Buffett doubled down on Rat Poison and Caustic Soda.  Much like his purchase of Acme brick and Justin cowboy boots at the height of the internet mania.  AI would go on to change the world in enormous ways, incinerating trillions of capital in the process.  Mr. Abel continued to sell them electricity..."

 

[ValueMaven]

huge homerun for Berkshire on MANY fronts.  This is a great asset, and we get to keep our preferred.  Well done.  

I wonder if some activist, or PE Fund will try and overpay for this??  Oncor would have been an amazing asset inside of BHE - but activists were there to block it.

[Gamecock-YT]

always thought this was the end game with the BRK equity purchases of OXY, but Vicki screwed that up and needs cash instead. What a dolt. 

[Eldad]

Too bad 10 Bill is just a rounding error these days. 

[John Hjorth]

2 hours ago, gfp said:

The history books are gonna have a field day with this stuff.  "just as the AI rocketship was taking off an aging Mr. Buffett doubled down on Rat Poison and Caustic Soda.  Much like his purchase of Acme brick and Justin cowboy boots at the height of the internet mania.  AI would go on to change the world in enormous ways, incinerating trillions of capital in the process.  Mr. Abel continued to sell them electricity..."

 

lol! , - 

 

9 hours ago, gfp said:

I think I heard something like $800m pretax but it is highly cyclical.  

 

Q2 2025

 

Thank you, @gfp,

 

Well, because of the transaction date, we'll have to wait for the Berkshire Hathaway 2025 10-K and Annual Report.

 

- - - o 0 o - - -

 

Edit :

 

A Buffett timing speciality 

Edited October 2, 2025 by John Hjorth