Idle Rambling On A Saturday Night -- February 15, 2020

Link here.

Two screenshots.

The first screenshot is "as is" from the link, but there is a data point in that screenshot that is of incredible interest. See if you can figure out what I want to point out.

The second screenshot, I think, points out a key data point for investors. It shows the dividend history for a publicly-traded company that I purposely did not name yet.

Your mission, should you choose to accept it: what connects those two screenshots, or more to the point, name the publicly-traded company whose dividend history is shown. Hint: the company is seen in the Berkshire Hathaway 13F screenshot above.

This is not an investment site, but I've been watching this for the past eight or nine months.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

Okay, here it is, see this post from May 16, 2019.

I think this -- the most recent Berkshire Hathaway 13F/OXY is a big, big deal. I think there were a lot of folks wondering how Vicki Hollub would do; a lot of folks wondering how OXY would do. I was certainly one of them. I had a lot of "faith" in Hollub and was impressed that she survived as CEO this past year.

I've been waiting for a "sign" before re-investing in OXY. 

Warren Buffett may have just provided that "sign."

The Buffett-OXY deal:

Buffett will receive an 8% return on his preferred shares to finance the deal plus warrants to buy common shares, a similar structure the financier used before in taking stakes in Bank of America Corp. and Goldman Sachs Group Inc. Icahn claimed that at least one large investor that he knows of would have provided the financing without the warrants.

Did Berkshire Hathaway exercise its warrants? See below.

In the 13F, Berkshire Hathaway more than doubled its OXY holdings, raising its stakes from 7,467,508 shares to 18,933,054 shares (about 2.5x its original holdings).

Share price for OXY:

• one year ago: $67
• six months ago: $44
• 45 days ago: $43
• yesterday: $42

The Berkshire-OXY deal:

With Occidental competing with Chevron to buy Anadarko, Berkshire bought $10 billion of Occidental preferred stock paying an 8% dividend, and received warrants to buy up to 80 million shares of Occidental stock for $62.50 a share.

Some observations:

• Vicki Hollub survived a very, very rough year;
• Berkshire Hathaway most likely bought the new OXY shares before the coronavirus shock;
• Vicki Hollub did not cut the dividend; she actually raised the dividend, albeit not much, but in line with previous dividend raises; 
• OXY is paying 7.52%;
• the one-year share price target is $51, which is still well below its 52-week high, just below $70;
• Berkshire Hathaway did not double its OXY holdings because of the warrants (unless I'm missing something)
• Warren Buffett likes dividends, but ...
• OXY's share price has not changed much in the past 45 days;
• December 31, 2019: $41.20 
• January 23, 2020 (Chinese cities quarantined): $42.52
• February 10, 2020: $41.11  
• February 14, 2020: $41.60
• the 13F article above was released after the market closed on Friday
• Occidental Petroleum announced its next ex-dividend date will be on 9-Mar-2020. The next dividend for OXY was announced to be 0.79. 

Again, idle rambling on a Saturday night; not ready for prime time.

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Click Bait

IBD: Warren Buffett Sells Apple, Buys Kroger 

This was the lede over at Investor's Business Daily, link here.

Warren Buffett bought shares of Kroger (KR) and Biogen (BIIB) in the fourth quarter, but the investing legend further pared his Apple (AAPL) and Wells Fargo (WFC) stakes, Berkshire Hathaway's (BRKB) latest quarterly 13F filings with the SEC showed.

This was the internet "tease" that brought me there:

Wow, what a joke. Passes for news these days.

Prior to the sale, on a dollar basis, AAPL was Berkshire Hathaway's biggest holding, at 30% of the entire portfolio. In the last quarter, BRK sold 1.4% of his shares in AAPL, dropping from 248,838,679 to 245,155,566 AAPL shares (3,683,113 shares). If he sold on December 2, 2019, shares were selling at $264. AAPL shares are currently fetching $325.

Paper loss: $225 million or close to a quarter billion dollars.

Warren's move certainly seems to be ridiculous on the surface, but we don't know the particulars. But Investor's Business Daily headlining "Buffett pared his Apple stakes" certainly seems a bit over the top.

My hunch: there was a long, long discussion between Munger, Buffett, et al, about what to do with a stock (AAPL) that was now 30% of the entire Berkshire Hathaway portfolio. "Traditional rules" would have argued for a much bigger cut, maybe as much as a 50% cut in the portfolio's AAPL holdings, but that would have been beyond the pale.

A bit of irony: Warren Buffett sells AAPL but then buys Kroger, which also sells apples. Along with oranges and cauliflower.