Warren Buffett’s Berkshire Hathaway scores $1.2 billion gain on Chevron in under 10 weeks

Warren buffett
Warren Buffett. REUTERS/Rick Wilking
  • Warren Buffett has scored a $US1.2 ($2) billion gain on Chevron this year.
  • Berkshire Hathaway built a 2.5% stake in the oil major in the second half of 2020.
  • The investment has surged in value by nearly 30% to $US5.3 ($7) billion.
  • Visit the Business section of Insider for more stories.

Warren Buffett’s Berkshire Hathaway has racked up a $US1.2 ($2) billion gain on its Chevron investment in under 10 weeks.

The famed investor’s company owned a 2.5% stake in the oil-and-gas group worth $US4.1 ($5) billion at the end of December, it revealed in a regulatory filing last month. Chevron’s stock price has surged 29% since then as crude prices have rebounded, boosting the value of Berkshire’s stake to $US5.3 ($7) billion.

Berkshire began buying Chevron shares in the third quarter of 2020. It secured regulatory permission to not include the stock in its 13-F portfolio update for that period, as it was still building the position.

The company purchased 44.3 million Chevron shares in the third quarter, and another 4.2 million shares last quarter, it disclosed in filings last month. The energy stock ranked among its 10 biggest holdings by market value at the end of 2020, Buffett said in his latest letter to shareholders.

Buffett’s decision to back Chevron is paying off so far, but it remains somewhat surprising. After all, Buffett expressed doubts about the oil sector’s prospects at Berkshire’s annual meeting last year, following his painful bet on Occidental Petroleum.

“If you’re an Oxy shareholder, or any shareholder in any oil-producing company, you’ll join me in having made a mistake so far in terms of where oil prices went,” he said. “Who knows where they go in the future?”

Buffett also stepped in to help Occidental beat out Chevron in a bidding war for Anadarko Petroleum in 2019. His subsequent bet on Chevron suggests there’s no bad blood left over from the clash.