Howard Marks (Trades, Portfolio), founder of Oaktree Capital (OAK, Financial), has increased his shareholding of EXCO Resources Inc. (XCO, Financial), a stock that is down 34% from three months ago to near a 10-year low.
Marks increased his stake by 23.04% to 45,251,182 shares, from 36,778,946 shares he owned at third quarter end, according to GuruFocus Real Time Picks. The shareholding represents 16.6% of the company’s shares outstanding.
He acquired $41,973,680, or 8,394,736 of the shares through a rights offering EXCO held beginning Dec. 17, 2013, in which it granted shareholders the right to purchase 0.25% of a share for each share they held, at a price equal to $5.00 per share of stock. The rights then expired on Jan. 9, 2014.
As of the third quarter, EXCO Resources ranks as Marks’ largest equity position, with a 4.8% weighting in his $5.2 billion portfolio of 77 stocks.
The same time as the rights offering in which Marks participated, it announced that it entered into two exercise commitment agreements with two other gurus: Wilbur Ross (Trades, Portfolio) of WL Ross & Co. LLC and Prem Watsa (Trades, Portfolio) of Hamblin Watsa Investment Counsel Ltd. Under the deal, Ross and Watsa agreed to purchase their respective pro rata portion of shares under the rights plan and all unsubscribed shares according to an over-subscription privilege.
As of third quarter end, Ross and Watsa owned 14.48% and 4.97%, respectively, of the company’s outstanding shares.
EXCO is a natural gas and oil exploration, exploitation, development and production company operating within the U.S. After its stock suffered last year due to a downturn in natural gas prices, the company is producing a 2014 capital budget that increases its exposure to crude oil. As it stands, EXCO expects the budget to engender a 15% decline in production year over year.
For full-year 2014, EXCO anticipates EBITDA in a range of $400 million to $425 million, based on expected average 2014 prices of $4.00 for natural gas NYMEX and $90 for oil NYMEX.
“From 2015 forward, incorporating anticipated acquisitions, we expect to return to a more predictable pattern of annual production growth of approximately 7% to 10% per year and corresponding Adjusted EBITDA growth of approximately 10% to 15% per year, based on forward NYMEX pricing,” the company said in a statement.
EXCO’s 10-year revenue and earnings history:
The company also made changes to management recently, announcing on Nov. 31, 2013, that its CEO and board chairman Douglas H. Miller had resigned from his position. The board appointed Jeffrey D. Benjamin as non-executive chairman of the board of directors, and began a search for a new CEO.
EXCO has a P/B of 3.9 and P/S of 1.76, near a three-year low.
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