Penn Virginia Corporation (PVA): Nokomis Capital Increases Exposure to Energy Sector

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Despite the optimism displayed by hedge funds such as Nokomis Capital, Penn Virginia Corporation (NYSE:PVA) continues to struggle. The energy sector has been suffering from depressed prices for some time now, leading to sharply reduced margins and generating hefty losses for the companies active in this industry. Since the demand for natural gas for example, has been unable to keep up with the large increase in supply, the price of the commodity is currently hovering around the $3 per million Btu mark, down from $13.50 in 2008. As a major producer of natural gas, Penn Virginia continues to suffer from these circumstances.

Despite the spike in U.S. shale production, which has resulted in hefty turmoil for oil producers and energy stock throughout 2014, Nokomis Capital has reason to remain optimistic. Although the current situation seems dire, analysts are already projecting the energy sector to make a comeback. In fact, the consensus analyst price target for Penn Virginia Corporation (NYSE:PVA) is at around $9.50, while the stock is currently trading at around $5.30, meaning Nokomis Capital can benefit largely from its increased stake. If viewed as a long-term investment, the hedge funds betting on the company’s recovery could see profits rise even higher. Hence, by increasing its exposure to this largely undervalued stock, the investment firm managed by Brett Hendrickson seems to be expecting the energy sector to recover sometime this year.

Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.

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