@@tennesseet7388 Yes, they are but with some experience you learn to zoom in on the important parts. I was just generally impressed by the quality of OXY's proxy statement. Their compensation incentives are some of the best I have ever seen in any company.
People often hop into cyclical trends at the top of their cycles. I never doubt Warren Buffett, but he is probably buying this for the dividend income and long term potential. But in the short term, people need to be careful about riding this the wrong direction.
Hi Tom, thanks for the clip! Interesting developments. When Buffett would stark exercising warrants, I imagine this would work as if Oxy would be placing extra shares at the agreed price? So it would yield the company cash, but dilute the existing shareholders? It seems this could put a ceiling on the stock price for the foreseeable future...
I believe Buffet has no incentive to exercise the warrants while the shares are giving a lower dividend yield than short-term treasuries interest on his cash (~5%). Also, if he does exercise them, that gives OXY cash to redeem his preferred early, which he does not want per comments. He will likely be patient and exercise as the preferred gets paid down and dividends rise in the future.
@@danaphanous hi, thanks for note. I agree he has no incentive to exercise warrants at current price, but he is buying on the open market at current price… so he definitely likes the stock at current prices. If share price goes up, he therefore might be inclined to use the warrants i imagine…
@@sandergorter5729 Yes, the higher the share price the more the incentive I imagine, he certainly seems to like the stock! But when it comes to warrants, Buffet is generally in no hurry and focusing on the long-term. You can recognize the gain by exercising any time, but he may still hold off using them until the tax-adjusted dividend yield at his warrant strike price on OXY rises above what his cash yields. Otherwise he is leaving income on the table. Buybacks/etc. that are lifting stock price can be recognized any time, only the dividend is what you don't capture with the warrants. I could be wrong, but I believe this is how he thinks about the equation.
Thank you Tom, I spent the last 2 days reading OXY and CVX annual reports, this video couldn't have come at a better time. :)
My pleasure :)
The reports and 10k on their website is quite beefy 😂
@@tennesseet7388 Yes, they are but with some experience you learn to zoom in on the important parts. I was just generally impressed by the quality of OXY's proxy statement. Their compensation incentives are some of the best I have ever seen in any company.
thank u Tom (from China)
Great video again Tom! I recently closed my Oxy position to buy more Reysaş, if you don't mind sharing do you own Oxy?
I don't own it directly
Great overview!
Thanks!
When it comes to commodities like oil, all companies sell the same product. The difference is in the Permian, OXY is among the lowest cost producers.
People often hop into cyclical trends at the top of their cycles. I never doubt Warren Buffett, but he is probably buying this for the dividend income and long term potential. But in the short term, people need to be careful about riding this the wrong direction.
Yeah, it's out of character for him in some ways, but the capital allocation certainly isn't!
Hi Tom, thanks for the clip! Interesting developments. When Buffett would stark exercising warrants, I imagine this would work as if Oxy would be placing extra shares at the agreed price? So it would yield the company cash, but dilute the existing shareholders? It seems this could put a ceiling on the stock price for the foreseeable future...
I believe Buffet has no incentive to exercise the warrants while the shares are giving a lower dividend yield than short-term treasuries interest on his cash (~5%). Also, if he does exercise them, that gives OXY cash to redeem his preferred early, which he does not want per comments. He will likely be patient and exercise as the preferred gets paid down and dividends rise in the future.
@@danaphanous hi, thanks for note. I agree he has no incentive to exercise warrants at current price, but he is buying on the open market at current price… so he definitely likes the stock at current prices. If share price goes up, he therefore might be inclined to use the warrants i imagine…
@@sandergorter5729 Yes, the higher the share price the more the incentive I imagine, he certainly seems to like the stock! But when it comes to warrants, Buffet is generally in no hurry and focusing on the long-term. You can recognize the gain by exercising any time, but he may still hold off using them until the tax-adjusted dividend yield at his warrant strike price on OXY rises above what his cash yields. Otherwise he is leaving income on the table. Buybacks/etc. that are lifting stock price can be recognized any time, only the dividend is what you don't capture with the warrants. I could be wrong, but I believe this is how he thinks about the equation.
@@danaphanous ah yes that makes sense, agree!