Three Things (6/27)
Jun 27, 2022
1) Warren Buffett boosts stake in Occidental Petroleum: Berkshire Hathaway purchased an additional $500 million in Occidental Petroleum shares according to a regulatory filing. The purchase brings Buffett’s total investment to nearly $8.5 billion, or ~16% of the energy company. Buffett began buying Occidental Petroleum stock earlier this year and Berkshire now owns 152.7 million shares.
Titan’s Takeaway: The Oracle of Omaha appears to be taking advantage of the recent weakness in oil prices and energy stocks to add to Berkshire’s holding. Despite market volatility, Buffett clearly believes that there is value to be found as he gets more cash to work.
2) Zendesk to be acquired: A group of buyout firms led by Hellman & Friedman agreed to buy Zendesk for $9.5 billion. The deal is an all-cash transaction that values the company at a 34% premium over the closing price on Thursday. The acquisition follows an unsolicited takeover bid by Hellman & Friedman, among others, in February.
Titan’s Takeaway: The deal represents a seismic shift in software valuations as the price tag is significantly lower than the deal presented in February. M&A will continue to heat up as the market reprices companies across all sectors of the economy.
3) Mexico’s economy grows: Mexico’s economy grew at its most rapid pace in over a year in April. Latin America’s second-largest economy grew 1.1% compared to the previous month. While GDP activity is growing faster than expected, investment-oriented sectors are still lagging.
Titan’s Takeaway: The Mexican economy narrowly avoided recession at the end of 2021 and has been recovering slowly since then. Tourism is vital for Mexico’s economy and cash strapped travelers pulling back spend may impact the economy's growth rates moving forward.
Cash Management
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