Exit Our Big Oil Bet

Occidental Petroleum (OXY) appeared to be breaking down last week before war broke out in Israel over the weekend. While the events in the Middle East are tragic, I do not think we will see a broader conflict that will disrupt global oil supplies. Between a deep decline in U.S. oil imports and a slowing global economy, demand for fuel seems to be receding to more normal levels.

Lower oil prices will in turn make it challenging for OXY to earn more than $5 per share next year, which takes this stock out of “value” territory, especially when you consider the relatively low dividend yield here. Weigh all the risks against the remaining return potential and I think we’ve taken this position as far as we can.

Sell OXY at market price.