Warren Buffett, the legendary investor and chairman of Berkshire Hathaway, has officially asked the board to replace him as chief executive officer by the end of 2025. At 94 years old, Buffett has been signaling a leadership transition for years, carefully building a capable team to lead the conglomerate into the future. Before stepping down, Buffett might choose to increase Berkshire’s stakes in some of his favorite investments.
One of those investments is Occidental Petroleum. Buffett is a long-time admirer of the company. He once mentioned he “read every word” of the company’s earnings transcript and praised CEO Vicki Hollub for her management.
Occidental’s revenue primarily comes from upstream production, with additional contributions from midstream and chemical production assets. Despite fluctuations in oil prices, the company’s stock price has consistently outperformed. Its valuation currently trades at a reasonable 17.4 times earnings with a 2.2% dividend yield.
Given these factors and a recent filing allowing Berkshire to acquire a substantial share of the company, more investments could be forthcoming. Last quarter, Berkshire acquired 760,000 more shares of Occidental. Another company Buffett might invest more in is Amazon.
Buffett’s potential investment shifts
Berkshire Hathaway already owns $2.1 billion worth of Amazon stock and is expected to buy even more over time. Although Buffett didn’t make the initial purchase—Ted Weschler and Todd Combs did—Buffett has acknowledged the value Amazon brings.
Amazon’s extensive e-commerce division has a significant market moat, and its Amazon Web Services (AWS) division is rapidly expanding, especially with the growth of AI technologies. AWS already contributes more than half of Amazon’s operating profit, and its importance is likely to grow in the coming years. Whether it’s the decision of Buffett, Combs, or Weschler, Berkshire is expected to continue adding to its Amazon position.
One of the more steady performers in Berkshire’s portfolio is Chubb Ltd., a significant player in the insurance sector. At the heart of Berkshire’s strategy lies its robust portfolio of insurance companies, which generate extra cash that can be invested in other securities. Chubb has maintained consistent underwriting profits with a combined ratio often below 100%, indicating it pays out less in claims than it collects in premiums.
Its conservative approach results in minimized volatility, aligning well with Buffett’s investment philosophy. The stock’s stability makes it an attractive option for further investment. While these are speculative predictions, they are based on Buffett’s historically successful investment strategies and current market assessments.
As Berkshire Hathaway approaches a pivotal leadership change, the company’s investment decisions continue to attract significant attention from investors worldwide.
