Alexander Roepers‘ Atlantic Investment Management has reported raising its activist stake in Oil States International, Inc. (NYSE:OIS). According to a newly amended filing with the Securities and Exchange Commission, Atlantic Investment Management currently owns around 3.85 million shares of the company, up from some 2.73 million shares disclosed in an earlier filing. Following the increase, the position held by Atlantic represents 7.2% of Oil States’ common stock, up from 5.1% held earlier.
Atlantic Investment Management is a fund with an equity portfolio worth around $1.5 billion. The fund usually buys significant positions in companies, focusing on mid-cap stocks and generally does not use leverage or leverage trading products. Mr. Roepers, the founder of Atlantic, prior to launching himself in the investment world, had six years of experience in the industrial segment, working a Dover Corporation and Thyssen-Bornemisza Group. One of Atlantic’s main funds, AJR International managed to return around 22.2% per year between 1993 and 2010, while another fund Cambrian (invests in several medium and low-tech industrial companies) had a return of around 33.2% per year.
In the previous round of 13F filings, the largest stake in Atlantic’s equity portfolio was represented by Owens-Illinois Inc (NYSE:OI). During the last quarter, the investor further raised its activist stake to 12.09 million shares, equal to 7.2% of the company from 11.11 million shares. Mr. Roepers also pitched the company during the last year’s Sohn Canada investor conference, setting a price target of $45 per share. In addition last month, the fund disclosed a letter sent to the board of Owens-Illinois, in which they expressed their disappointment with the performance of the CEO, and urged the board to address it in order to create more shareholder value.
The new filing of Atlantic showed the second increase in their position in Oil States International, Inc. (NYSE:OIS) over the last several months. In December, the fund reported raising its stake to 2.73 million shares, from 2.37 million shares held initially. Overall, Atlantic has been holding shares of Oil States International since the second quarter of 2012, its initial stake containing 300,000 shares. The stock of the company appreciated by some 29% since the end of June, 2012. Overall, during 2014, the stock fell by over 15%, on the back of falling earnings and revenues caused by a decline in oil prices. For the third quarter of 2014, Oil States International, Inc. (NYSE:OIS) posted earnings of $1.05 per share, down from $3.04 in the same quarter of the previous year, while its revenue appreciated to $471.03 million, from $438.18 million.
With a market cap of $2.1 billion, Oil States International, Inc. (NYSE:OIS) is a company engaged in manufacturing drilling equipment and products for deepwater production facilities. The company has recently acquired through its subsidiary Oil States Industries Montgomery Machine Company, which is involved in production of high-specification components for the offshore capital equipment industry.
Moreover, with its stock losing ground on the back of the decline in oil prices, which affected the majority of companies from the energy sector, analysts are not very optimistic about the prospects of Oil States International, Inc. (NYSE:OIS). At the beginning of the year, Zacks downgraded the stock to ‘Underperform’ from ‘Neutral’, keeping the price target of $46.90
Aside from the decline of oil prices, Oil States International, Inc. (NYSE:OIS)’s value was hit by another development. In May, the company completed the spin-off of Civeo Corp (NYSE:CVEO), which provides accomodation services for companies engaged in exploration and production of oil, gas, iron ore, and coal. The spin-off was mainly urged by several major activist investors, such as Barry Rosenstein of JANA Partners and David Einhorn of Greenlight Capital. However, JANA Partners has since dumped its entire stake in Oil States and at the beginning of January it also disclosed selling its entire position in Civeo Corp.
In this way, with JANA exiting its position, what Oil States International, Inc. (NYSE:OIS)’s investors might need is the intervention of another activist, which will be able to help the company to maximize its shareholder value. Mr. Roepers, despite taking activist positions, prefers to stay under the radars, so it will be hard to determine whether he is actually engaged in any kind of discussions with the board or not. It might be also the case that Mr. Roepers is betting on oil prices to rebound, since he is invested in several companies tied with the oil and gas industry such as Baker Hughes Incorporated (NYSE:BHI) and Cameron International Corporation (NYSE:CAM).
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