Horos Asset Management recently released its Q1 2020 Investor Letter, a copy of which you can download here. Horos Value Iberia fell by -35.1% compared to -27.6% of its benchmark index. On the other hand, Horos Value Internacional was down by -30.2% compared to -19.6% of its benchmark index. You should check out Horos Asset Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Horos Asset Management highlighted a few stocks and Valaris Plc (NYSE:VAL) is one of them. Valaris is an offshore drilling contractor. Year-to-date, Valaris Plc (NYSE:VAL) stock lost 86.6% and on June 24th it had a closing price of $0.63. Here is what Horos Asset Management said:
“A very clear case in which liquidity risks have increased greatly in recent weeks is that of the companies that own offshore oil rigs. In particular, we see financial risks that are difficult to assume in those companies that do not have good contract coverage (leased rigs), with greater exposure to deepwater oil drilling (whose rigs are contracted much further down the cycle, as they require a longer duration and greater amount of capital committed by the oil exploration and production companies) and with a tough debt schedule (near term and high maturities). It is worth noting that as we explained in our previous letter, we already decided last quarter to reduce our exposure to Valaris for these same risks, especially as our thesis of the recovery in their rig utilisation rates was delayed more than expected and their liquidity profile worsened. For this reason, we drastically reduced our weight in the company and upped our investment in Shelf Drilling, where liquidity risks are much more limited, as it has greater contract coverage and less exposure to the deepwater segment than Valaris.
At the end of February, even before the impact of the pandemic became acute and Saudi Arabia decided to end the oil production cuts in the absence of an agreement with Russia, we exited our investment in Valaris for the risks we have just discussed, following the release of the company’s annual report and the comments made by the management team at the conference call.”
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Video: Top 5 Stocks Among Hedge Funds
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