Bank of America: Don't blindly follow Warren Buffett, Occidental Petroleum stock price rise limited

By    23 Aug,2022

As Warren Buffett continues to buy Occidental Petroleum (NYSE:OXY), should the average investor follow in the footsteps of the "stock god"? The answer from analysts at Bank of America is: Better not.


In a research report on Monday, Bank of America gave Occidental a "neutral" rating and a price target of $80, an upside of about 12 percent from the current stock price. Bank of America said that if Warren Buffett's holding of Occidental shares represents his bearishness on oil prices, then investors have better investment options given the limited upside of the company's shares.

Buffett currently owns 20 percent of Occidental and was approved last week to buy up to 50 percent of Occidental shares.

Bank of America reminds investors that Buffett has not often been successful in investing in oil stocks. Previously, Buffett had bought ConocoPhillips before the 2008 U.S. stock crash.

In 2008, Buffett's Barshire bought a 5.5% stake in ConocoPhillips, but the subsequent financial crisis triggered a plunge in oil prices, and ConocoPhillips shares took a heavy hit. According to data, ConocoPhillips plunged 41% in 2008.

Later, Warren Buffett admitted in a letter to shareholders that he made a foolish decision in 2008 to buy a large amount of ConocoPhillips stock when crude oil and natural gas prices were at their peak.

Bank of America said their original intent was not to pick out Buffett's mistakes in investing in crude oil stocks, but simply to remind investors that if they are long on oil prices, then they have many better investment options.