Daniel Lewis’ Orange Capital Boosts Its Position as This Stock’s Price Continues to Fall

Daniel LewisOrange Capital has boosted its stake in Bellatrix Exploration Ltd (NYSE:BXE), as a new filing with the Securities and Exchange Commission showed. The fund reported holding around 25.8 million shares of the company, versus 23.8 million shares held earlier. Following the increase, Orange Capital holds an activist stake that amasses 13.5% of Bellatrix Exploration’s common stock, up from 12.4% reported in an earlier filing. Orange Capital has more than $1 billion in assets under management.

Daniel Lewis - Orange Capital

Overall, Orange Capital has been bullish on Bellatrix Exploration Ltd (NYSE:BXE) for several months now. Earlier in October we reported that the fund raised its stake to more than 21.61 million shares, from 17.49 million shares held earlier. The fund initiated its stake in Bellatrix during the third quarter of 2013 and at the end of September it was its largest long equity position in terms of value. However, since August 12th, when the fund reported ownership of shares of the company for the first time, the stock slid by more than 40%. Meanwhile the company moved its listing to New York Stock Exchange from NYSE MKT. However, Orange Capital last increased its exposure to the company amid Bellatrix disclosing the acquisition of some complementary assets for $118 million, which will add 4,500 barrels of oil equivalent per day to its production capacity next year, taking the full year 2014 production guidance to between 49,000 to 50,000 boe/d, versus the previous guidance of 48,000 to 49,000 boe/d. In addition to acquiring new assets, Bellatrix Exploration Ltd (NYSE:BXE) has also sold minority interests  in its Bellatrix O’Chiese Ness-Ohpawganu’ck deep-cut gas plant at Alder Flats and pipeline infrastructure under production.

However, oil prices slumped on the back of high supply and the latest OPEC meeting did not result in any decisions that would positively impact the oil price. The members of the cartel decided not to cut the production and many considered it as an attempt to slow down US shale oil production growth. In this way, if the oil prices continue to maintain their low levels, it will damage many North American oil producers, even though many other oil rich countries will suffer as well.

However, Orange Capital’s bet on Bellatrix Exploration Ltd (NYSE:BXE) comes amid strong financial results. Its third quarter results show a jump in revenues to $151 million from $61 million a year ago, while its Net Income went up to $45 million, from $29 million. Analysts also seem to be optimistic about the company’s prospects as the stock has a consensus rating ‘Hold’ but its average price target amounts to approximately $10.00 per share. A couple of days ago, BMO Capital Markets downgraded the stock to ‘Market Perform’ from ‘Outperform’.

In addition to Orange Capital, another fund that is bullish on Bellatrix Exploration Ltd (NYSE:BXE) is Nokomis Capital, managed by Brett Hendrickson, which during the third quarter added 458,400 shares to its stake, taking it to 911,200 shares.

Disclosure: none