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The U.S. stock market saw mixed performance on Tuesday morning, with NextEra Energy (NYSE: NEE) and Boeing shares (NYSE: BA) declining while Occidental Petroleum (NYSE: OXY) experienced gains.
The divergent moves come amid significant news developments for each company, including a Senate hearing on Boeing’s safety practices, Warren Buffett’s increased stake in Occidental Petroleum, and NextEra Energy’s plans to sell equity units to fund renewable energy projects.
Boeing Faces Scrutiny Over Safety and Whistleblower Claims
Boeing CEO Dave Calhoun is set to face tough questions from U.S. senators regarding the company’s safety culture and new whistleblower allegations.
The Senate hearing follows a January mid-air emergency involving an Alaska Airlines 737 MAX 9, which raised widespread concerns about the plane’s safety. Senator Richard Blumenthal revealed that a current Boeing quality assurance investigator, Sam Mohawk, recently informed the panel of systemic disregard for documentation and accountability of nonconforming parts.
Mohawk claimed that nonconformance reports soared 300% compared to the period before the 737 MAX grounding and that the program intentionally hid faulty parts from the FAA during an inspection. While Calhoun is expected to acknowledge shortcomings, he will also emphasize Boeing’s efforts to improve.
The company has been under increased scrutiny from regulators and airlines since the January incident, with the FAA recently giving Boeing 90 days to develop a comprehensive quality improvement plan.
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Buffett Bets Big on Occidental Petroleum
Warren Buffett’s Berkshire Hathaway has significantly increased its stake in Occidental Petroleum, acquiring nearly 3 million additional shares over three trading days.
The purchases, made at an average price of $59 per share, bring Berkshire’s total holdings to 255,281,524 common shares, representing almost 29% of the company. The stake, worth approximately $15.37 billion as of Monday, underscores Buffett’s confidence in Occidental Petroleum and the U.S. shale industry.
Despite sparking takeover speculation, Buffett has denied any intentions to acquire control of the company, stating that they like OXY’s position in the Permian Basin but wouldn’t know what to do with a controlling interest. Occidental Petroleum, meanwhile, is working to close its $12 billion acquisition of Permian producer CrownRock by August 2024.
NextEra Energy to Raise Funds for Renewable Projects
NextEra Energy announced plans to sell $2 billion of equity units to Wells Fargo Securities and BofA Securities to raise capital for its renewable energy projects.
The news sent NextEra shares down 3.4% in morning trading. The net proceeds from the sale will be used to fund investments in the company’s energy and power projects, with plans to invest $12 billion in solar and $1.5 billion in battery storage from 2024 to 2027.
Each $50 equity unit will have a contract to purchase NextEra Energy common stock in three years and a 5% ownership interest in a NextEra Energy Capital Holdings debenture due June 1, 2029. NextEra Energy’s focus on renewable energy comes as the sector grows and attracts investor interest.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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