Now, it appears our esteemed Mr. Warren Buffett, no longer at the helm of Berkshire Hathaway – a rather sensible arrangement, one might think, allowing a fellow to pursue more pressing matters like perfecting the art of the cucumber sandwich – has seen fit to add a few more shares of Chevron to the already substantial pile. A most interesting development, wouldn’t you agree? One begins to suspect a chap has spotted a bit of value, a decidedly clever notion in these rather topsy-turvy times. It’s a bit like finding a perfectly good tenner tucked away in an old waistcoat pocket – always a cheerful surprise.
Last quarter, the Berkshire portfolio didn’t exactly undergo a wholesale revolution, but a few strategic adjustments were made. A spot of selling here, a judicious purchase there. And Chevron, it seems, received a rather substantial boost – a further eight million shares, bringing its share of the Berkshire holdings to a respectable 7.24%. A considerable chunk of the pie, what!
A closer inspection reveals why Mr. Buffett – or rather, those now steering the good ship Berkshire – have taken such a fancy to this particular oil concern. It’s been a fixture in the portfolio since 2020, and with good reason, one suspects. A chap doesn’t accumulate holdings unless he anticipates a bit of upside, and Mr. Buffett, as we all know, is not one for reckless gambles. He prefers a sound, sensible investment, like a well-made pair of boots.
Chevron: A Diversification of the Most Satisfactory Kind
The oil stock attracting Berkshire’s attention is none other than Chevron, a name synonymous with, well, oil. Mr. Buffett isn’t a stranger to the energy sector, having dabbled in other oil concerns with varying degrees of success. But this bet on Chevron is rather larger than most, and it’s not difficult to see why. The company has been rather busy, producing oil and gas at a record clip last year.
This record production translated into a rather handsome $26 billion returned to shareholders in the form of dividends and share buybacks – an 18% increase, if you please! A most agreeable state of affairs. However, and here’s the rub, the stock price itself only managed a modest 1.5% increase. A bit of a puzzle, wouldn’t you say? The dividend yield added a bit of gloss, of course, but it hardly set the Thames on fire.
The explanation, as is so often the case, lies in the price of oil. It seems crude oil took a bit of a tumble last year, falling by roughly 20%. Even ExxonMobil, also enjoying record production, found itself in a similar predicament. A chap can produce all the oil he likes, but if he can’t get a decent price for it, he’s rather stuck, isn’t he? A 1.5% return on the stock, given the circumstances, appears almost dashingly impressive.
Chevron shares have perked up a bit in 2026, but they remain below their former glories. This is largely due to oil prices lingering under $70 a barrel, although recent events in the Middle East have given them a bit of a nudge. Back in 2022, oil was fetching over $100 a barrel. And as any seasoned investor knows, even a small increase in selling price can produce outsized profits. It’s a bit like adding a dollop of cream to a cup of tea – it makes all the difference.
Chevron estimates its break-even production price to be around $50 a barrel. At $70 a barrel, they make a tidy profit of $20. But at $90 – a mere 29% increase – those profits double! A most agreeable prospect, wouldn’t you agree? It’s a bit like finding a second slice of cake unexpectedly appearing on your plate.
In short, Chevron’s underlying business appears to be in remarkably robust health. It’s just that the price of oil – something beyond their control – is obscuring the gains. What the future holds is anyone’s guess, of course, but rising geopolitical tensions could send oil prices soaring. And in a rising price environment, Chevron shares stand to benefit handsomely. Mr. Buffett and his successors seem to be rather bullish on that scenario, and one can hardly blame them. It appears they’ve spotted a bit of value, a most sensible investment indeed.
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2026-03-05 01:35