This Top Warren Buffett Stock Continues to Get Better as It Grows Bigger

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Matt DiLallo, The Motley Fool

Wed, Apr 2, 2025, 1:27 AM 5 min read

Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), has invested astir $290 cardinal into a portfolio of publically traded companies. Oil elephantine Chevron (NYSE: CVX) ranks successful the apical five. Berkshire owns 118.6 cardinal shares worthy $19.8 billion, which is 6.9% of its concern portfolio.

There are tons of oil stocks Buffett's institution could person bought. However, Chevron is his company's apical presumption successful the assemblage for a crushed (it's up of Occidental Petroleum, Berkshire's sixth-largest holding, astatine 4.5% of its concern portfolio).

One apt information wherefore Buffett's institution owns truthful overmuch Chevron banal is its absorption connected getting amended arsenic it grows bigger. It precocious showcased 1 mode it does that.

Chevron is 1 of the world's largest lipid and state producers, with assets that span the globe. It invests heavy each twelvemonth to turn its portfolio done exploration, development, and acquisitions. However, the company's absorption isn't to physique a monolithic empire of lipid and state assets. Its extremity is to turn shareholder value.

Because of that, Chevron is ever looking for ways to upgrade and optimize its planetary vigor portfolio. It volition often trim astir the edges by selling noncore assets to recycle that capital into increasing its champion assets.

Chevron took its latest measurement to amended its portfolio by precocious agreeing to merchantability a 70% involvement successful its East Texas state assets for $535 cardinal to 1 of the largest producers successful the region. It volition person $75 cardinal successful currency and a $450 cardinal superior transportation to money the drilling of caller wells successful the region. The deal's operation volition make implicit $1.2 cardinal successful worth for Chevron implicit the agelong word done its retained involvement successful the increasing accumulation of this partner-funded development.

The merchantability is portion of Chevron's program to divest $10 cardinal to $15 cardinal successful assets by 2028 arsenic it optimizes its planetary portfolio. Last year, Chevron sold $7.7 cardinal successful noncore assets, including exiting Canada successful a $6.5 cardinal deal.

Chevron is gathering 1 of the world's champion portfolios of lipid and state accumulation assets. It does that done integrated concern and strategical acquisition. The institution is investing $15 cardinal into integrated superior projects this year. Most of that wealth volition spell toward expanding its U.S. portfolio, including processing its assets successful the Permian Basin, DJ Basin, and the Gulf of Mexico (known arsenic the Gulf of America successful the U.S.).

This dense concern should really wage disconnected implicit the adjacent 2 years. Chevron expects to make an further $10 cardinal successful yearly escaped currency travel by 2026 arsenic it ramps up accumulation connected respective major projects and improvement regions. That's a large boost from past year, erstwhile it produced $15 cardinal successful escaped currency flow.