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Justin Sullivan/Getty Images News Warren Buffett’s Berkshire Hathaway ( BRK.A ) has been accumulating stock in Occidental Petroleum (NYSE: OXY ), and recently got approval to add to its position up to 50% of the company by FERC. Many investors are following along and buying Occidental stock too, perhaps hoping for a buyout. However, history indicates that buying other lower valuation, oil and gas stocks could be more compelling than buying the same company that Berkshire might buy out, to the extent that they do so. A similar dynamic played out with Burlington Northern Railroad stock more than a decade ago. Berkshire accumulated Burlington stock, it outperformed peers, and it was bought out for a 31.5% premium in November 2009. However, looking at a chart of railroad industry peers from the time of Berkshire’s takeover offer for Burlington to today, it is apparent holding on to railroad stocks from the time of Berkshire’s purchase was a better bet than selling to Berkshire, and a better bet than Berkshire stock itself! CP data by YCharts Berkshire hasn’t sought or arrived at a deal with OXY, and there is no guarantee that it will do so. If it were to fully […]
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