Why I Sold This Stock (Warren Buffett Was Wrong)

Added: 2026-06-02

[00:00:00]Hello everyone and welcome back. I recently sold a stock that Warren Buffett loves and I think he got the investment thesis wrong. I invested to follow Warren Buffett. I did a lot of research about the company, about the capital redeployment, the buybacks, the dividends. And then I sold it because I saw early signs of the story changing, the fundamentals changing about the company. And since I sold, my worries turned out to be correct because the company turned to another direction.

[00:00:42]And this is not good for the shareholders. And Warren Buffett still holds this stock in his portfolio, in the portfolio of Berkshire Hathaway, of course. And the more I do some research, the less I like it. So, in other words, I dodged a good bullet here and I'm happy I sold.

[00:01:01]In this video I want to talk about this stock, but I also want to share a story because this will happen to you. When you buy a stock and then you buy for this and this and this reason, and then something changes. And you have to see the early signs before the story completely changes. And if you dodge enough bullets like this, you reduce the amount of mistakes you will make and you will improve your performance. By spotting early signs, you can become a better investor and I'm very happy I sold this stock because during this for this proceeds, I bought other stocks that went up, okay? Including Lam Research. I used the proceeds to buy Lam Research that doubled in 2025. So, I'm very happy I sold and moved to another direction, okay? In case this is your first video from this channel, welcome.

[00:01:54]My name is Kristof Noor. I've been investing for almost a decade now and I achieved a performance of 25% per year because I tend to see early signs of a turnaround story. Okay. And the company I want to talk about today is Occidental Petroleum.

[00:02:12]Okay. It's an oil and gas play.

[00:02:16]And the story is pretty simple for Occidental. Like all the oil and gas sector industry, it's cyclical and it can generate massive free cash flows.

[00:02:32]When the oil price went up meaningfully in 2022, the capital allocation decisions from all these companies, they were extremely simple. We have excess cash because of higher oil prices, so we are going to reward shareholders, first point.

[00:02:53]Second point, reward shareholders. Third point, reward shareholders. Buybacks, buybacks, dividends, dividends, no stupid acquisition. And Warren Buffett invested in Chevron that did this beautifully and Occidental Petroleum and this is where I have mixed views. So, the history of Warren Buffett and Occidental Petroleum goes back to Anadarko in 2019.

[00:03:20]They have worked together with Vicki Hollub, the great CEO.

[00:03:24]And for many years Warren Buffett has praised Vicki Hollub, the CEO of Occidental Petroleum, saying that she is one of the best CEOs of the industry. It's wonderful, very rational capital allocator. Stay with me because that's important. Very rational capital allocator, wonderful, they had a lot of fun working together, they want the benefit of the shareholders and all the stakeholders. Vicki Hollub was the greatest CEO of the industry. So, a lot of praise.

[00:03:56]And they doubled down on their positions. I think Berkshire Hathaway bought a huge position at the beginning of 2022 or maybe before in 2021 when the stock went down.

[00:04:10]So, average price of $30 per share.

[00:04:13]But for us, written investors, we knew publicly when it was a little bit too late and the stock was above $50.

[00:04:20]Anyway, now that we have the information and that we have the 13F that Warren Buffett is buying the dip immensely on Occidental Petroleum, he has chosen his favorite in this industry.

[00:04:33]Maybe I will start to do some research.

[00:04:36]So, I did start some research, some intense research about Occidental Petroleum because I knew the oil and gas industry was cyclical.

[00:04:45]So, is this cyclical? Are earnings about to go down? What is the capital allocation decision?

[00:04:52]And then I decided to buy the dip heavily at around $50, $55 because the plan was very simple.

[00:05:02]Number one, Vicki Hollub.

[00:05:06]Part of the investment thesis is how rational the great CEO was. She's one of the few CEOs of the industry to be extremely rational.

[00:05:18]By the way, if you want to become a better investor and improve your performance, I have a coaching program.

[00:05:24]It gives you the exact method I've used to generate 25% per year for almost a decade. More on that at the end of the video. If you look at the past, when you have the information in 2021, 2022, they decided to use the excess cash to repay their debt.

[00:05:46]So, with the Anadarko deal, they had a massive amount of debt in 2019, and then they decided that the main priority for the cash flows were to repay the debt.

[00:05:57]2020, lower debt. 2021, lower debt.

[00:05:59]2022.

[00:06:01]Now, here we go. We have roughly $20 worth of debt.

[00:06:06]And Vicki Hollub, the CEO, says, "We are done. We are done repaying the debt.

[00:06:12]Now, the priority that's you, the shareholder." Like I started this video, all the oil majors said the same thing.

[00:06:21]Dividends, buybacks. Dividends, buybacks. Dividends, buybacks. And guess what? It kind of worked because they in 2022, 2023, they decided to start a big buyback program. At some point, the company was repurchasing 4 5% of their shares.

[00:06:39]So, that's a 5% yield. And at the same time, you have a dividend of 2%. So, 5.7.

[00:06:47]This is great.

[00:06:48]Right? You have a 7% shareholder yield.

[00:06:51]At the same time, uh Monish Pabrai decided to invest in Occidental Petroleum because he saw the stock like a bond. You have a little bit of dividends, little bit of buybacks.

[00:07:04]Nothing can ever happen. They have good locations. They have a good CEO. This is fine. And even if you look at the the fund from Monish Pabrai, Wagons Fund, at some time, they had a 4 or 5% allocation towards Occidental Petroleum. So, Warren Buffett likes Oxy.

[00:07:24]Charlie Munger liked Oxy.

[00:07:27]Monish Pabrai likes Oxy.

[00:07:30]And the main mm cash outflow is buybacks, dividends.

[00:07:37]And at the time, the valuation was cheap.

[00:07:41]So, the investment thesis was extremely simple.

[00:07:44]You stand on the shoulders of giant.

[00:07:48]Now, what happened?

[00:07:50]They announced I mean, let's say 12 months after I bought, 1 year 1 year and a half after I bought, they announced that their capital allocation plan was about to change.

[00:08:04]From big buybacks and big dividends to a major acquisition with a lot of debt.

[00:08:12]So, they completely stopped the buybacks, as you can see here, the blue line. They did 1 year when they bought back 5% of shares, and then they issued more shares. It's now in the positive territory, more shares, and they have never done any buybacks since then.

[00:08:31]And so, the only thing remaining is the dividend, dividend yield of 2 or 3% but clearly, that's a massive change. At the same time, here is the debt. Here is the debt you have.

[00:08:45]Look at this for the past 10 years. You see 2019, massive amount of debt, and then you repay your debt in 2020, 2021, 2022. You promise you will never increase debt again, and then massive deal, debt increases again. So, you stop the buybacks, you dilute shareholders, and you increase the debt level.

[00:09:06]And now, the priority is to repay the excess debt.

[00:09:10]Berkshire Hathaway has worked with them.

[00:09:12]They bought back the OxyChem deal.

[00:09:15]Anyway, they will generate cash flow.

[00:09:17]The goal right now with Occidental Petroleum is to reduce the debt level.

[00:09:22]And this is a red flag for me.

[00:09:25]When a company promises a capital allocation plan, and then after 1 year, you change your plans.

[00:09:33]You pro- you pledge, you promise to the world, "Yeah, we are done paying repaying our debt. Now the priority will be you the shareholder because we are making a lot of profit right now. And after 1 year, you change.

[00:09:47]This is something that is a no-no for me. It's an absolute red flag for me because um you invest for specific reasons and then everything fall apart.

[00:09:59]At the time you had what? 20 billion dollars worth of debt and they said it's a low plateau and we want to stay this way.

[00:10:06]It has increased to 25 and now to 15.

[00:10:09]They are literally repaying more debt and it was exactly not the plan at all.

[00:10:14]It was not the plan at all. At the same time this is a company that is producing cash flows.

[00:10:21]Uh let me look at the free cash flow for this one.

[00:10:24]You have a positive free cash flow. They are not burning cash, right? You can use all this cash flow to the buybacks if you want if you want. So, what happened when it comes to the stock price? The stock price did nothing.

[00:10:36]And then because of lower oil prices and lower visibility for capital allocation, the stock price went down. But most importantly because of lower oil prices now because of the geopolitical conflicts at the beginning of 2026, the stock is going up.

[00:10:51]But it is just following the oil price, right? When oil price was high, it went higher. Oil prices went lower, it went lower.

[00:11:00]If I had held my shares, I would have seen zero gains from 2022 to now. So, 3 years 4 years of zero gains.

[00:11:14]So first red flag is a massive change of capital allocation. And I'm putting this video for a lesson for anyone watching this video because this will happen to you. You invest for specific reasons and everything collapses.

[00:11:30]All the pledges, all the promises from the investment team, boom, that's gone.

[00:11:34]So, you invest for the buybacks, there is no buyback. You invest for conservative, rational management, they have a lot of that and they dilute you, the shareholder.

[00:11:44]First red flag.

[00:11:45]Second red flag, you remember how Warren Buffett was praising Vicki Hollub, the CEO.

[00:11:53]She announced said she announced her departure from the company. I have some quotes here very recently, actually.

[00:12:01]Beginning of 2026, you have all the staff thanking Vicki. Yes, Vicki, I want to express my best to you as you move into your next chapter. So, the best CEO is out.

[00:12:15]They will replace it with replace her with a great CEO, I have no doubt about this one, but the two main reasons why I invested in in Occidental Petroleum are dead.

[00:12:29]Capital allocation out. Great CEO praised by the best investor of the world out.

[00:12:36]So, everything collapsed and if I had held I would have been in a very bad situation, like zero gains and this is not what I want. If my goal is to make 25% per year, I want to spot these red flags as soon as possible. When the capital allocation strategy is changing, I'm out. It's about trust, it's about resiliency, sustainability, okay? And my goal as an investor is to select good horses, good winners and just monitor them.

[00:13:12]If they are having a good run, a good horse and delivering I hold, but if there is a problem, if there is a change I'm out. And it seems like Monish Pabrai shared the same conclusion because he also sold Occidental Petroleum.

[00:13:31]So, it was seen as a hedge and now it's not his priority at all. He is investing in other stuff.

[00:13:37]But, Warren Buffett still holds.

[00:13:40]Now it's no longer here. You have Greg Abel, the new CEO of Berkshire Hathaway.

[00:13:46]We'll see if it changes. But, I sold I think during 2024 before the drop.

[00:13:55]And most importantly, before the lack of performance.

[00:13:59]When you had early signs of a big change in capital location I mean I have I was out. And I'm very happy I pulled the trigger on this one. As you can see here this is the number of shares.

[00:14:15]The number of shares over time. It went up because of the deal and then went down.

[00:14:19]And that's it. Your buyback program lasted 1 year. Congratulations. And then the number of shares is going up.

[00:14:27]So, now Occidental Petroleum is not appealing at all.

[00:14:32]You have a cyclical business with a new CEO.

[00:14:37]We don't know the new CEO. You have a changing capital location policy. They got some cash because of the OxyChem deal.

[00:14:44]So, maybe the debt is paid off. What are they saying right now on the slides?

[00:14:49]If you go to the slide deck from the latest earnings call from May what do you say? We want to prioritize balance sheet's strength through dividend additional deleveraging. So, they still want to reduce debt. Focused on lower cost. Okay.

[00:15:11]And that's it. So, their priority is still to deleverage.

[00:15:19]Literally, a management that broke their promise.

[00:15:22]So, be extremely careful when you invest in such companies.

[00:15:27]When you have a clear promise to reward shareholders, and if they are not consistent, if they change the rules, don't hesitate to change your mind. The thesis has changed. The facts have changed. So, I'm out, and it was the right move.

[00:15:46]It was the right move because I bought things that were much more consistent and growing much more, and I generated outperformance in this market since then.

[00:15:55]Thanks to this move, by the way. So, it's a lesson for me. It's a lesson for you.

[00:16:00]And in case you want me to find these red flags, these early signs before the market, you can contact me and join my coaching program. I can personally help you find these early signs, so you avoid wasting your time. Because if I had held, I would have lost thousands and thousands and thousands of dollars just holding this.

[00:16:23]Okay. So, it's a massive change that cost me a tens of thousands of dollars, if not more. So, pretty interesting to see the situation. Very happy I sold. I will still monitor the situation, right?

[00:16:34]But, um now the CEO is out.

[00:16:37]The thesis is not improving. I'm happy to just stay away for for the moment and see how it goes. The next move would be to follow what Greg Abel, the new CEO of Berkshire Hathaway, is doing. If he is selling the position or not. And I want to end the video with this.

[00:16:56]Maybe Berkshire Hathaway uh is forced to hold OXY because of size.

[00:17:04]They are just too big. Their portfolio size is too big, so they can't invest in microcaps. They can't invest in smallcaps. They can't invest in midcaps.

[00:17:14]They are forced to invest in largecaps.

[00:17:16]And out of all the large cap stocks available around the world, uh how many are cheap?

[00:17:23]A few, right? Uh so, they maybe they don't have the choice, and they are forced to stay invested because they literally see zero opportunity. So, they are happy to have no gains, but you have a little bit of a dividend yield.

[00:17:38]Maybe this is what is happening. Very curious to see what they will do in the future.

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