Chevron CEO thinks stocks are a great long-term value game, which drew Buffett to the name

Chevron CEO Michael Wirth told CNBC he had not spoken to Berkshire Hathaway since the company took a stake in the oil giant, but said the move suggested confidence in the future. long term of Chevron.

“I cannot infer anything other than their investment decision would suggest that there is some confidence in the long-term future of our company and our ability to generate long-term shareholder value.” Wirth said on CNBC’s “Closing Bell”.

“I look forward to meeting them in the weeks and months to come,” he added.

Berkshire began building a position in Chevron during the fourth quarter of 2020 and, by the end of last year, had amassed more than 48 million shares of the oil giant, according to documents filed with the Securities and Exchange Commission.

Berkshire’s annual letter to shareholders said that in the fourth quarter, Chevron’s position was worth north of $ 4 billion, making it one of the company’s top ten holdings.

“I think Chevron is a great long-term value investment for any investor, so we certainly welcome Berkshire Hathaway’s investment in our business. They are well known as a long-term investor and a value-driven investor. and that we are very happy to have in our inventory, ”said Wirth.

His comments followed Chevron’s annual Investor Day, where the company pledged to achieve higher returns and lower carbon emissions in the future. The company’s shares hit their highest level in a year on Tuesday, before closing the session down 0.23%.

For the year, the stock rose almost 30% as part of a rotation in the beaten energy sector, although the stock was about 19% below its all-time high of 2014.

After a brutal year for the energy sector as a whole as oil prices fell to never-before-seen levels, Chevron implemented aggressive cost-cutting measures and significantly lowered its spending plan by capital. During its investor day, the company presented an optimistic vision to more than double return on capital employed by 2025 and increase free cash flow by more than 10% per year by this year.

“We are seeing markets that are healing. Demand is back as the pandemic is progressively better controlled and supply has been limited somewhat by OPEC and OPEC +, so excess stocks are decreasing and prices are reflecting this gradual return to a more balanced state in the markets, ”Wirth told CNBC.