Thanks for the great video i really like your approach to cyclical companies with P/B and P/E. One thing i look at when i buy cyclical companies like CVX or memory semiconductor companies like MU, is it has bigger Fwd P/E ratio than TTM P/E ratio. It tells you that the company is on the down cycle and its time to buy also when P/E ratio is small then their on the up cycle so need to get ready to sell at some point
I think another reason occidentals is such an attractive prospect combined with the reasons you've said is their work in the carbon capture industry. They stand to make a lot of money from selling carbon credits to other competitors and more polluting industries, they're really ahead of the curve compared to competitors.
@@InvestingwithTom Not entirely sure as it would be a huge amount to offset, even if they plan on building the largest DAC project in the world! I just know they already have contracts with airbus and the Texans to buy their carbon credits. Guess it kind of depends on how much credits are selling for and how much it benefits their financials.
I find the OXY carbon capture idea unproven but ambitious, pretty rare for Buffett to support new tech. I’m much more convinced after listening to CEO Vicki Hollub speak that OXY is operating in a capital efficient way long term, not e.g. drilling new wells for short term profits.
Well done, Tom. I think Buffett believes oil is only getting more expensive & scarcer to find over time. nat gas demand is only rising over time as LNG for power demand & heat. Also a bet on dollar falling. I predict Oxy will remain a LT hold; CVX probably, at least as a proxy for cash.
Could it also be about preservation? Charlie somewhere said that he would like to keep the oil in the ground for future use instead of using it all up as gas. Maybe, BRK has some influence at least on OXY in this regard (i.e. reduction or at least no significant expansion of output)? OXY and CVX also both have large oil fields in the permian basin, which is the area in the U.S. where production costs are the lowest. So, both companies can very well survive if oil prices should fall again (especially, if the companies have repaid debt and remain cost efficient, i.e. reluctant with regard to further mining activities).
Great points. I believe Oxy have specifically come out and set production limits alongside their capital return plans. Buffett has publicly praised what he’s heard around buybacks etc on Oxy conference calls, which in a weird way probably helps them stick to their word and not expand production
Have you ever heard of subjectivity of perception ? Maybe Buffett hasnt "missed the boat" and $OXY $CVX outperform the S&P500 over a median term. Now of course you might suggest buying in 2020 wouldve made him a fortune but that is obviously not how financial markets work. If you try to shoot for these multibaggers, you will lose money quickly. Oil was also cheap at 40$ and 20$. If you had bought it there, you wouldve lost a lot of money. Warrens #1 rule is: "Never lose money". Sounds dumb but makes a lot of sense if you have a second look at it. These bloody percentages always behave differently to the downside :)
Well perhaps he didn’t think of that then.He can’t go back in time so he has to buy now of course but the thesis is still valid it is just that now is when he can buy.Myself i have thought of things which i wish i had thought of a few years ago but i didn’t so i have to play the hand i have. That is pretty straightforward.
he didn’t miss the boat back then… he’s already bought many oil stocks before the boom he’s just buying more at these high prices for some reason, he must have a method for his madness.
It's not rocket science is it? It's a great investment if you either don't believe in climate change (Charlie seems to be a climate change denier), or don't care about it - it's obviously a profitable investment and the world doesn't seem ready to get off it's oil-addiction. And with some of the world trying to get off oil none the less, chances are that oil prices aren't likely to go down much. Also ESG investors avoid oil stocks, so they're probably undervalued on a purely economical basis. The dividends alone should make it worth investor's while.
The broad investment climate seems to be that people don't like oil companies. I love having oil companies in my portfolio. I guess that makes me a climate denier!
@@InvestingwithTom I hate politics, yet things like these clips are just TOO funny. Well done to make note of the politics, and not get lost. Love your stuff, thank you, and keep it up!
i cannot fully agree with your framing of the political bit. you have a hostile reporter making a bogus claim. there is more to it, like the oil industry sitting on over 9k unused permits, on over 13.9M acres.
Of course - it was just a funny clip to show some of the political tensions happening. The point is that the political environment around oil production is very different to what you might've seen in the early 2000's, and certainly in the 70's and 80's
Hi Tom, in a recent podcast I saw that you cannot access Turkey. Try 'Exante', a European broker that has access to the Turkish market. It should be relatively straightforward to open an account. The only ick is that you have to invest 10k euro minimum in any Turkish stock. But they are reputable and have very solid customer care. I use them myself. Let me know if you need any help :)
Excellent, the subject of how to evaluate enterprises that are so many cyclical is a top subject.
Happy to cover it!
Thanks for the great video i really like your approach to cyclical companies with P/B and P/E. One thing i look at when i buy cyclical companies like CVX or memory semiconductor companies like MU, is it has bigger Fwd P/E ratio than TTM P/E ratio. It tells you that the company is on the down cycle and its time to buy also when P/E ratio is small then their on the up cycle so need to get ready to sell at some point
I think another reason occidentals is such an attractive prospect combined with the reasons you've said is their work in the carbon capture industry. They stand to make a lot of money from selling carbon credits to other competitors and more polluting industries, they're really ahead of the curve compared to competitors.
You think they’re gonna produce enough carbon credits to offset all their oil emissions and more??? 🤨
@@InvestingwithTom Not entirely sure as it would be a huge amount to offset, even if they plan on building the largest DAC project in the world! I just know they already have contracts with airbus and the Texans to buy their carbon credits. Guess it kind of depends on how much credits are selling for and how much it benefits their financials.
I find the OXY carbon capture idea unproven but ambitious, pretty rare for Buffett to support new tech. I’m much more convinced after listening to CEO Vicki Hollub speak that OXY is operating in a capital efficient way long term, not e.g. drilling new wells for short term profits.
Great video. To the point. No fluffy language.
Well done, Tom. I think Buffett believes oil is only getting more expensive & scarcer to find over time. nat gas demand is only rising over time as LNG for power demand & heat. Also a bet on dollar falling. I predict Oxy will remain a LT hold; CVX probably, at least as a proxy for cash.
I think he'll own it for while too - time will tell
It went from like $5 to $100 within a year or 2
Could it also be about preservation? Charlie somewhere said that he would like to keep the oil in the ground for future use instead of using it all up as gas. Maybe, BRK has some influence at least on OXY in this regard (i.e. reduction or at least no significant expansion of output)? OXY and CVX also both have large oil fields in the permian basin, which is the area in the U.S. where production costs are the lowest. So, both companies can very well survive if oil prices should fall again (especially, if the companies have repaid debt and remain cost efficient, i.e. reluctant with regard to further mining activities).
Great points. I believe Oxy have specifically come out and set production limits alongside their capital return plans. Buffett has publicly praised what he’s heard around buybacks etc on Oxy conference calls, which in a weird way probably helps them stick to their word and not expand production
9:07 Commodity stocks
The time to buy oil was in spring 2020, when the oil price was negative. Why Buffett is buying now and he missed the boat back then?! I have no idea!
Have you ever heard of subjectivity of perception ?
Maybe Buffett hasnt "missed the boat" and $OXY $CVX outperform the S&P500 over a median term.
Now of course you might suggest buying in 2020 wouldve made him a fortune but that is obviously not how financial markets work. If you try to shoot for these multibaggers, you will lose money quickly.
Oil was also cheap at 40$ and 20$. If you had bought it there, you wouldve lost a lot of money.
Warrens #1 rule is: "Never lose money". Sounds dumb but makes a lot of sense if you have a second look at it. These bloody percentages always behave differently to the downside :)
Well perhaps he didn’t think of that then.He can’t go back in time so he has to buy now of course but the thesis is still valid it is just that now is when he can buy.Myself i have thought of things which i wish i had thought of a few years ago but i didn’t so i have to play the hand i have. That is pretty straightforward.
he didn’t miss the boat back then… he’s already bought many oil stocks before the boom he’s just buying more at these high prices for some reason, he must have a method for his madness.
Time will tell.
Maybe he knows 1970s inflation will reoccur straight ahead.
Great move❤
Chevron also owns REGI, a renewable energy company. That reporter is a goober.
that was a fox "news" reporter. NUFF SAID.
I own shares in OXY
I would like to invest in this company but I dont think I understand it enough.
It's not rocket science is it? It's a great investment if you either don't believe in climate change (Charlie seems to be a climate change denier), or don't care about it - it's obviously a profitable investment and the world doesn't seem ready to get off it's oil-addiction. And with some of the world trying to get off oil none the less, chances are that oil prices aren't likely to go down much. Also ESG investors avoid oil stocks, so they're probably undervalued on a purely economical basis. The dividends alone should make it worth investor's while.
The broad investment climate seems to be that people don't like oil companies. I love having oil companies in my portfolio. I guess that makes me a climate denier!
“Buy on P/B, sell on P/E” is a great framework, Tom! Thanks for sharing! /G
Energy for 2023 especially last half of 2023.
10 Supertankers at US ports for oil for China !
Love the White House press clip! 😅
I really hate politics, but found that kind of funny
@@InvestingwithTom I hate politics, yet things like these clips are just TOO funny. Well done to make note of the politics, and not get lost.
Love your stuff, thank you, and keep it up!
Nah guys. It’s about tax exemptions, look how much these two invest to stay close to CO2 neutral.
i cannot fully agree with your framing of the political bit. you have a hostile reporter making a bogus claim. there is more to it, like the oil industry sitting on over 9k unused permits, on over 13.9M acres.
Of course - it was just a funny clip to show some of the political tensions happening. The point is that the political environment around oil production is very different to what you might've seen in the early 2000's, and certainly in the 70's and 80's
I think you’re right that he sees short term profit, but a long term drop. Maybe he plans to sell quickly before it falls again.
If oil company becomes net zero (or below zero) and are helping the environment then we should still use oil (from those companies).
oil companies can't become net zero. If you think that's an option, you're deluding yourself.
Hi Tom, in a recent podcast I saw that you cannot access Turkey. Try 'Exante', a European broker that has access to the Turkish market. It should be relatively straightforward to open an account. The only ick is that you have to invest 10k euro minimum in any Turkish stock. But they are reputable and have very solid customer care. I use them myself. Let me know if you need any help :)
First comment
speedy