Occidental Petroleum Corporation (OXY), Exxon Mobil Corporation (XOM): The Irani Era

Meanwhile, going into 2013, there were a total of 42 hedge funds long Chevron Corporation (NYSE:CVX). This includes billionaire Ken Fisher’s Fisher Asset Management as having the largest position, worth close to $397 million, accounting for 1.1% of its total 13F portfolio (see Fisher’s cheap stock picks).

Occidental Petroleum Corporation (NYSE:OXY) had a number of billionaire hedge fund managers upping their stakes at the end of 2012. Billionaire D.E. Shaw (the top hedge fund owner by shares) increased his stake 86%, as did Jim Simons’ Renaissance Technologies. Billionaire Steve Cohen’s SAC Capital upped its stake by 241% (check out Cohen’s top consumer picks).

What’s Next?

The company’s shares have fallen 25% since it reached a high of $115 in 2011. During this time Chazen and Irani clashed over the direction of the company. Chazen wanted the focus to be on North America, whereas Irani advocated international expansion. Now Chazen is free to re-focus the company, and a breakup is likely.

Occidental Petroleum Corporation (NYSE:OXY) could be broken up into four separate companies. Those companies could be a (1) U.S. crude producer, (2) international oil and gas company, (3) chemicals manufacturer, and (4) a pipeline and logistics company. According to Fadel Gheit, an analyst at Oppenheimer & Co., “each separate and standalone entity would be very competitive and highly valued in its own sector.”

In CEO Steve Chazen, shareholders have the right man for the job. As a former investment banker, he understands mergers and acquisitions and how best to create shareholder value. He has seen how shareholder value has been created in the oil sector when ConocoPhillips spun off its Phillips 66 operations and Marathon Oil spun off Marathon Petroleum. I don’t think Chazen or the board want to be the targets of activists (like with Hess Corporation) if they don’t follow through on increasing shareholder value.

For a steady, low-volatility investment, investors can look toward Exxon Mobil Corporation (NYSE:XOM) or Chevron; however, for a higher-growth play (that also happens to pay a 2.8% dividend yield), investors can find value in Occidental. I see Occidental Petroleum as an undervalued stock with plenty of upside potential, and my target is $125 on a breakup of the company.

The article With the Chairman Out Look for this Stock to Rise originally appeared on Fool.com and is written by Marshall Hargrave.

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