We don't have too many, but one of our worst picks ever was Occidental Petroleum. (OXY: $10.05). Occidental is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. Headquartered in Houston, Occidental was one of the largest U.S. oil and gas companies, But our timing couldn’t have been worse. After we added it to the Special Opportunities Portfolio in January, the world came apart. With crude in the low 60s everything looked good for the company. With crude in the 30s, not so good. Not good at all. Covid hit and the world started to shut down and certainly didn’t need as much oil and gas for heating and operating automobiles, trucks and office buildings.
The merger with Anadarko looked brilliant at the time. But certainly not for $55 billion. The whole company now is worth less than $10 billion. The company expected to deliver at least $3.5 billion annually in cost and capital spending synergies, but all of these best wishes vanished in the early months of 2020.
Carl Icahn owns 10% of the firm and if anyone can make something happen it is Mr. Icahn. For those of you not quite sure what to do with the stock, at this low level one would think it couldn’t go much lower, and one would think that Icahn would use some of his magic to bring the company out of the doldrums. Holding for another year at this level might see you with a higher price in the future.
We hereby lick out wounds and say goodbye to what could have been a great company in a different time.