When Warren Buffett is interested in a stock, investors become attentive. The greatest investor of our generation loves to buy stocks and hold them forever.
Buffett’s track record is nothing short of brilliant; many of his holdings over years have done so well. In fact, just piggy-backing on the Oracle of Omaha’s ideas has often paid off handsomely for anyone who is watching.
Take Occidental Petroleum ( OXY) , which moved sharply higher late in 2022 after it was disclosed that Buffett’s Berkshire Hathaway ( BRK.A) ( BRK.B) took a sizable stake in the oil and gas company. He loaded up when the stock was trading lower than current levels, but this week another note said Buffett had bought more shares around the $60 range.
After several purchases, Buffett is now the biggest stakeholder in Occidental.
The stock rallied Wednesday on the news of the latest purchase but has now backed off a bit. Still, this is likely a nice buying opportunity to get in the name around the same price as Buffett (currently around $61.90).
The daily chart, below is a mess, with volatility and large spikes up or down. Notice the heavy volume bar at the end of February (arrow)? That might be where Buffett had been adding stock, even in the prior two months where there were heavy volume prints.
Moving Average Convergence Divergence (MACD) is now turning up for a buy signal crossover, but the Relative Strength Index (RSI) seems to be a bit bearish, with lower highs on that indicator.
The 200-day moving average is not far away at $64.84. That may be a good first target (about 5% away). If we see some heavier volume prints up toward that 200 DMA, there could be some momentum towards the January highs, call it $68. From there, it’s clear sailing to the mid-$70s.
If that happens we can say, “Thank you, Mr. Buffett!”