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 Valaris Limited (NYSE:VAL) in the first quarter 2024 investor letter. Headquartered in Hamilton, Bermuda, Valaris Limited (NYSE:VAL) provides offshore contract drilling services. On May 1, 2024, Valaris Limited (NYSE:VAL) stock closed at $64.06 per share. One-month return of Valaris Limited (NYSE:VAL) was -12.69%, and its shares gained 16.47% of their value over the last 52 weeks. Valaris Limited (NYSE:VAL) has a market capitalization of $4.639 billion.
Praetorian Capital stated the following regarding Valaris Limited (NYSE:VAL) in its first quarter 2024 investor letter:
“Energy Services Basket (Valaris Limited (NYSE:VAL) – USA), Tidewater (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.”
Valaris Limited (NYSE:VAL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database at the end of the fourth quarter, Valaris Limited (NYSE:VAL) was held by 47 hedge fund portfolios, compared to 48 in the previous quarter.
We previously discussed Valaris Limited (NYSE:VAL) in another article, where we shared the list of most undervalued value stocks to buy. 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.
