Chevron’s CEO believes stocks are a great long-term game of values that attracted Buffett to the name
Michael Wirth, CEO of Chevron, speaks at the World Economic Forum in Davos, Switzerland on January 23, 2020.
Adam Galica | CNBC
Michael Wirth, Chevron’s CEO, told CNBC that he hasn’t spoken to Berkshire Hathaway since the company’s stake in the oil giant, but the decision suggests confidence in Chevron’s long-term future.
“All I can deduce is that your investment decision indicates that there is some confidence in the long-term future of our company and in our ability to generate long-term value for shareholders,” Wirth said on CNBC’s “Closing Bell.”
“I look forward to meeting you in the weeks and months to come,” he added.
Berkshire began building a position in Chevron in the fourth quarter of 2020 and had amassed more than 48 million shares in the oil giant by the end of last year, according to the Securities and Exchange Commission.
Berkshire’s annual letter to shareholders said the Chevron position was valued at more than $ 4 billion as of the fourth quarter, making it one of the company’s ten largest holdings.
“I believe Chevron is a great long-term value investment for any investor, and so we definitely welcome Berkshire Hathaway’s investment in our company. You are known as a long-term investor and value investor, and who we are. in stock, “said Wirth.
His comments followed Chevron’s annual Investors Day, when the company promised higher returns and lower carbon emissions going forward. The company’s shares hit their highest level since the beginning of the year on Tuesday before the session eventually fell 0.23%.
For the year, the stock is up nearly 30% on a rotation into the rundown energy sector, although the stock is about 19% below its 2014 all-time high.
After a brutal year for the energy sector by and large, with oil prices dropping to unprecedented lows, Chevron implemented aggressive cost-cutting measures and slashed its investment plan significantly. During Investor Day, the company presented an optimistic vision to more than double its return on investment by 2025 and increase free cash flow by more than 10% per year by this year.
“We are seeing markets healing. Demand is returning as the pandemic is gradually being better controlled and supply has been somewhat constrained by OPEC and OPEC +. As a result, excess inventory is going down and prices are reflecting this gradual return to one.” more balanced state against markets, “Wirth told CNBC.