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This Billionaire Hedge Fund Manager Sees Opportunity for APA
Stock Analysis & Ideas

This Billionaire Hedge Fund Manager Sees Opportunity for APA

With capital markets soaring close to all-time highs, it can be difficult to find stocks in which to open long-term investments. Throw in rising inflationary fears, a global supply and shipping crunch, and labor shortages, and it may seem like nowhere is safe. One place to look for indications of upside, is in the people who make big calls for a living, the hedge funds.  

One in particular prefers to buy into failing or underperforming companies, and proactively nurse them back to efficiency. The Elliott Management Corp., founded in 1977 and run by billionaire Paul Singer, is known for engaging in the practice of “vulture capitalism,” and has been one of the most successful firms in the world.  

The New York City-based fund manages assets worth approximately $48 billion, and Singer himself has a net worth of $4.3 billion. It appears, he also knows what he is doing when it comes to personal investments. According to TipRanks, Singer’s portfolio has gained 123%, and averaged 13.1% over the past three years.  

Now, one might be thinking, how can this information be leveraged to help the everyday investor? Well, as per SEC regulation, each fiscal quarter hedge funds and institutional investors with over $100 million in assets must report what is known as a 13F filing. This discloses certain long positions to the public, and is intended to increase investor confidence in the capital market system.  

With this in mind, we took a look at which stocks Elliott Management believes they can turn around, and which ones they picked up recently.  

APA Corporation (APA 

Known as the holding company for the Apache Corporation, APA engages in exploration of hydrocarbons for energy development purposes. The Houston-based company holds several reserve sites globally, notably in Egypt, the North Sea, Suriname, and the Permian Basin in Western Texas. While energy and gas prices have soared over the last two months, some analysts believe the stock has little room left to run.  

Perhaps this is where Singer and Co. come in. The hedge fund manager and his group are familiar with guiding large companies toward profitability, and they took an interest in APA.  

This past quarter, Elliott Management opened a sizable position in APA. The hedge fund picked up 2,750,000 shares, equating to a then-market value of $58,933,000. Considering the shares are today worth $75,845,500, the hedge fund is in the green to the tune of $16,912,500.  

Although the stock has fared well as energy prices rise amid a backdrop of decreasing supply and increasing demand, analyst opinion on the stock is mixed. One of the neutral voices is that of Arun Jayaram of J.P. Morgan, who wrote that “APA would be a beneficiary if a moratorium on federal acreage occurs given the company’s international footprint in the North Sea and Egypt.” 

This hypothetical halt to U.S. activity has yet to occur, thus Jayaram believes the stock is trading at a reasonable price already.  

The analyst rated the stock a Hold, and assigned a price target of $34.  

The rest of the Street assigned similar or more optimistic hypotheses. The analyst rating consensus of Moderate Buy, based on seven Buy and seven Hold ratings. The average APA price target is $34.64 per share, representing a potential 12-month upside of 25.6% from today’s levels.  

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

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