As of Friday's close, Warren Buffet's company had an almost 10% stake in the oil and gas company.
The company, which didn't hold any common shares of the energy group at the end of December, disclosed in a regulatory filing this week that it owned 29.8 million of them. A separate filing shows that it spent $3.1 billion to triple the position to 91.2 million shares.
In exchange for providing $10 billion of financing for the oil-and-gas company's takeover of Anadarko, the company gave up $10 billion worth of preferred stock. The preferred shares have an annual dividend of 8%.
The warrants for 83.9 million common shares have an exercise price of $59.62, thanks to the financing deal. The warrants are out of the money because the stock closed at $56.15 on Friday. If the stock price goes up above the exercise price, the warrants can be used to purchase shares at a discount and make a profit.
The preferred stock-and-warrant deal was blasted by Carl Icahn, another billionaire investor.
He said that the deal was like taking candy from a baby and that Vicki Hollub even thanked him publicly for it.
When the price of West Texas Intermediate crude oil had fallen to below $30 a barrel, Warren Buffet was worried about his investment at the annual shareholder meeting in 2020.
If you are a shareholder in an oil company, you will join me in making a mistake in terms of where oil prices went.
Concerns about Russia's invasion of Ukraine have led to a 50% increase in the price of West Texas Intermediate crude to a seven-year high of $115 this year. The shares have risen to a two-year high. The stock was clearly overvalued and poised to benefit from rising energy prices, and so the team decided to buy it.
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