Published Sun, 31 May 2020 10:58:00 -0400 on Seeking Alpha
Occidental Petroleum has chosen to celebrate management re-election by slashing dividends and issuing equity.
We disagree strongly with the issuance of equity at this time - especially given the issues shareholders have faced.
With that said, the company's cash flow is significant and at this point, it's worth investing in.
Occidental Petroleum (NYSE: OXY) is an almost $12 billion company, one of the largest U.S. focused publicly traded oil companies. The company recently had its shareholder meeting where it voted in 11 directors, including its CEO who has a history of destroying shareholder value. Additionally, the company agreed issue 400M shares, partially to pay Buffett's equity. That's a significant potential dilution. Lastly, the company cut its dividend to $0.01 / share.
Occidental Petroleum - The Business Journals
Occidental Petroleum Shareholder Meeting Results
Occidental Petroleum's shareholder meeting recently resulted in all 11 board seats being elected with 3 held by Carl Icahn's new nominations. Now, whether that happened as a result of shareholders not using their ability to vote and ignoring the election is unknown. However, results are results so that's what we'll focus on.
Additionally, two major results came from the meeting and the aftermath. First, the company passed the right to issue 400 million new shares. That's significant, it represents a potential for a max of more than 40% dilution. Second, the company chose to knock its dividend down to $0.01 / share, a symbolic dividend as the company seeks to save $360 million / year.
Occidental Petroleum Meeting Our View
To start we are incredibly disappointed with Occidental Petroleum, as the company continues its shareholder unfriendly policies.
First, we understand the logic behind cutting dividends to $0.01 instead of nothing. The aim is to prevent short-term shareholder pain due to the number of funds that can't invest in the stock at $0 dividends. Do... Read more