2 Stocks Warren Buffett Is Almost Certainly Buying in Q4

It's easy to find out which stocks Warren Buffett has bought in the past. Berkshire Hathaway (BRK.A -0.68%) (BRK.B -1.02%) reports its holdings regularly to the Securities and Exchange Commission (SEC). These SEC filings reveal all of the stocks Buffett and his team bought and sold in the previous quarter.

There's no way to know for sure which stocks Buffett is buying in the current quarter, though. But we can make some pretty good guesses. Here are two stocks Buffett is almost certainly buying in Q4.

The obvious choice

What's Buffett's favorite stock to buy? Berkshire Hathaway itself. If I had to pick the one stock that he's most likely buying in the fourth quarter, it would be Berkshire.

I think that Berkshire is the obvious choice for a simple reason. The company spent $4.2 billion in the first half of 2022 repurchasing its shares. Berkshire buys back stock when Buffett and his longtime business partner Charlie Munger believe that its valuation is attractive. So far in Q4, Berkshire's share price has been lower for the most part than it has been throughout the earlier part of the year.

This one is a no-brainer, in my view. If Buffett and Munger thought that Berkshire was worth buying at a higher price, they'll be even more excited about repurchasing shares at a lower price.

Unlike most other companies, Berkshire's share repurchase program doesn't authorize a maximum amount. The only limitation is that Berkshire's cash position can't go below $30 billion. That shouldn't be a problem for Buffett in buying shares of Berkshire in Q4, though. The giant conglomerate reported cash, cash equivalents, and short-term investments in U.S. Treasury bills of more than $101 billion as of June 30, 2022. 

Buffett's next giant?

I also suspect that Buffett is scooping up additional shares of Occidental Petroleum (OXY -0.12%) in Q4. The oil and gas producer already ranks as the sixth-largest position in Berkshire's portfolio after some aggressive buying earlier this year.

Why is it likely that Buffett is expanding his stake in Occidental? I think there are two key reasons.

First, Berkshire won approval from the Federal Energy Regulatory Commission a couple of months ago to increase its stake in Occidental to 50%. As of Sept. 28, 2022, Berkshire owned 20.9% of the oil company. There's plenty of room to buy more shares -- and it's something that Buffett seems to want to do.

There's an argument to be made that Occidental could even become Berkshire's next "giant." In Buffett's annual letter to Berkshire Hathaway shareholders earlier this year, he mentioned that the company had four "giants" -- its insurance businesses, Apple, rail operator BNSF, and energy business BHE. Should Berkshire up its stake in Occidental to 50%, the company could be in the running to be added to the list.

Second, Occidental will probably continue its winning ways over the near term. OPEC+ countries recently agreed to cut oil production. Russia's invasion of Ukraine is still limiting global oil and gas supply. Occidental stands to benefit from these dynamics. And Buffett knows it.

Are they good picks for other investors?

Just because Buffett likes a stock doesn't necessarily mean that it's the best fit for other investors. In this case, though, I think that both Berkshire and Occidental are good picks right now.

Sure, Berkshire's share price is down somewhat this year. However, it's still beating the market. My view is that it will remain a solid choice for long-term investors due to its significant diversification across industries.

As for Occidental, it's one of the three Buffett stocks most likely to soar in Q4, in my opinion. The company enjoys strong tailwinds that will probably carry over into 2023. Also, I won't be surprised if Berkshire's purchases of the stock could provide a further catalyst if and when they're disclosed publicly.

We won't know with 100% certainty which stocks Buffett is buying in Q4 until after the end of the quarter. However, I fully expect that Berkshire bought back more of its stock and gobbled up more of Occidental. Investors who aren't multi-billionaires could potentially profit by doing likewise.