Activist investors play the market differently than regular investors. Once they are convinced that a company is more valuable than what the market values it, they don’t shy away from buying a huge stake in the company regardless of whether its stock is going up or down. That is exactly what Daniel Lewis’ Orange Capital is doing with Bellatrix Exploration Ltd (NYSE:BXE), whose stock is down more than 30% in last one month. As per a recent filing with Securities and Exchange Commission (SEC), the fund increased its stake to over 21.61 million shares from 17.49 million shares that we reported at the end of September. The fund’s now own over 11.3% of all common stock of Bellatrix Exploration Ltd (NYSE:BXE) as an activist investor.
The fund wants changes on the Board of the company and is even pushing for a sale of the company to increase shareholder’s value. Till now Orange Capital has spent approximately $158 million (CAD $172,000,000) including brokerage commission on building its stake in Bellatrix Exploration Ltd (NYSE:BXE). Orange Capital initiated its stake during mid-July and since then has reported an increase in stake four times in its filings with SEC. The fund seeks to increase the transparency for investors in the company by changing the constituent, size and age of the Board and a few other measures, as reported in one of its earlier SEC filing.
Orange Capital was founded in 2005 by Daniel Lewis, a former employee of Citigroup. It currently manages assets in excess of $750 million. Other major holdings of the fund (as of second quarter of 2014) include H & R Block Inc (NYSE:HRB), shares of which are marginally up by 3.4% year on year, and Nexstar Broadcasting Group, Inc. (NASDAQ:NXST), which is down more than 14% during the last year.
Bellatrix Exploration Ltd (NYSE:BXE) is a $890 million market cap, oil and gas exploration company based in Canada. On October 1, the company changed its listing from NYSE MKT to New York Stock Exchange. The company is currently focusing on developing its two core resource plays, the Cardium and the Notikewin/Falher intervals in Western Canada. It currently trades at nearly 6 times its forward earnings. Most analysts are bullish on the stock, the consensus rating being ‘Buy’ with an average price target of $11.48.
Other major institutional investors who own the stock include David Dreman’s Dreman Value Management and Israel Englander’s Millennium Management. As of June 30, 2014, Dreman Value Management owns over 850,000 shares and Millennium Management owns over 368,000 shares.