Top-level insiders such as ‘C-suite’ executives tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the stock is attractive.
In this report, we are going to highlight a large purchase from a top-level insider at Occidental Petroleum Corp (OXY:US). Occidental Petroleum is an American energy company that has operations in the US, the Middle East, Africa, and Latin America. The company, which has built a vast infrastructure of integrated energy assets around the world, operates through three reporting segments: oil and gas, chemical, and midstream and marketing. It is listed on the New York Stock Exchange and currently has a market capitalization of $54.2 billion.
Occidental Petroleum: Insider Buying
Our insider transaction data shows that on March 28, Occidental Petroleum’s President and CEO Vicki Hollub bought 14,191 OXY shares at a price of $56.24 per share. This trade cost the insider just under $800,000 and increased her holding to 467,282 shares.
We think this trade is interesting for a couple of reasons. Firstly, Ms. Hollub has considerable company experience. During her 35-year career with Occidental, she has held a range of top-level positions across multiple continents. Before becoming President and CEO, she served as President and Chief Operating Officer, overseeing the company’s oil and gas, chemical and midstream operations. This means that she is likely to have an excellent understanding of the company, and its prospects.
Secondly, the trade from Ms. Hollub follows some very large purchases from Warren Buffett’s investment company, Berkshire Hathaway (a 10% owner). Our data shows that between March 2 and March 16, Berkshire spent around $5.7 billion on OXY stock.
Benefitting From High Oil Prices
Occidental Petroleum’s recent fourth quarter 2021 results showed that the group is benefiting from high oil prices.
For the quarter, adjusted earnings per share came in at $1.48, up from $0.87 in the third quarter of 2021 and -$0.65 in the final quarter of 2020. Meanwhile, cash flow from operations totalled $3.2 billion, compared to $1.4 billion in the prior-year quarter.
As a result of the higher cash flows, the group was able to improve its balance sheet and liquidity position significantly, reducing its debt maturities by $2.2 billion. It also announced a new shareholder return framework, and increased its dividend substantially.
In light of these developments, we see the insider buying here as a bullish indicator.