Praetorian Capital, an investment management company, released its first-quarter 2024 investor letter. The fund was up by 9.25% net of fees in the first quarter. A copy of the letter can be downloaded here. The core portfolio positions saw both advances and declines in the first quarter, but the Event-Driven book generated a decent return for the first time in many quarters. For more information on the fund’s top picks in 2024, please check its top five holdings.
Praetorian Capital featured stocks like Tidewater Inc. (NYSE:TDW) in the first quarter 2024 investor letter. Headquartered in Houston, Texas, Tidewater Inc. (NYSE:TDW) provides offshore support vessels and marine support services to the offshore energy industry. On May 1, 2024, Tidewater Inc. (NYSE:TDW) stock closed at $91.42 per share. One-month return of Tidewater Inc. (NYSE:TDW) was -6.73%, and its shares gained 121.36% of their value over the last 52 weeks. Tidewater Inc. (NYSE:TDW) has a market capitalization of $4.816 billion.
Praetorian Capital stated the following regarding Tidewater Inc. (NYSE:TDW) in its first quarter 2024 investor letter:
“Energy Services Basket (Valaris (VAL – USA), Tidewater Inc. (NYSE:TDW) – USA): In 2020 when oil traded below zero, drilling activity ground to a halt and many energy service providers declared bankruptcy. Many of these businesses had teetered on the verge of bankruptcy for years due to reduced demand and over-leveraged balance sheets. The bankruptcies led to consolidation and reduced future industry capacity, removing future competition in the recovery.
With oil prices now recovering, I believe that demand for drilling and other services will increase from subdued levels. While producers have been slow to increase spending on exploration despite recoveries in energy prices, I believe that this only extends the timing on the thesis. In the end, the only way to reduce future energy prices is to see a dramatic increase in global oilfield services spending. Any postponement of this spending only leads to higher prices and more wealth transfer from the global economy to the oil producers, which will likely end up resulting in an increase in spending on exploration and production.
We purchased many of these positions at fractions of the equipment’s replacement cost, despite restored balance sheets and positive operating cash flow. As spending in the sector recovers, I believe that the potential for cash flow will become more apparent and this equipment will trade up to valuations closer to replacement cost.”
A fleet of offshore supply vessels and tugs carrying materials to an oilrig in the distance.
Tidewater Inc. (NYSE:TDW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database at the end of the fourth quarter, Tidewater Inc. (NYSE:TDW) was held by 39 hedge fund portfolios, compared to 39 in the previous quarter.
We previously discussed Tidewater Inc. (NYSE:TDW) in another article, where we shared the list of fastest growing energy companies in the US. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
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