Contrarian defensive investor Steven Romick serves as the portfolio manager of the award winning FPA Crescent Fund. He joined FPA Funds in 1996 after graduating with a bachelor's degree in education from Northwestern University. In the second quarter of 2013, Romick shorted Baytex Energy Corp. (TSX:BTE) at an average price of C$39.29. In the third quarter of 2015, Romick bought to cover his position at C$9.91, profiting a 75% return.
The Baytex Energy holding has peaked at C$58.32 per share in January 2012 and since then has been dropping in price at a significant rate.
Baytex Energy is an oil and gas corporation based in Calgary, Alberta. The company is engaged in the acquisition, development and production of crude oil and natural gas in British Columbia, Alberta, and Saskatchewan in Western Canada. Baytex Energy also operates in the U.S. in North Dakota and Wyoming. Approximately 78% of Baytex’s production is crude oil and natural gas liquids.
Baytex Energy has a market cap of $769.57 million, an enterprise value of $2.53 billion, a P/S ratio of 0.64 and a dividend yield of 24.59.
Below is a Peter Lynch chart for Baytex Energy Corp.
Baytex Energy Corp has a few serious warning signs according to GuruFocus:
1) The per share revenue has been in decline over the past three years.
2) The asset growth is faster than revenue growth. This is important because it usually indicates that a company may be getting less efficient.
3) The operating margin is -100.58%, ranked lower than 65% of the 444 companies in the Global Oil & Gas E&P industry.
Romick proves that short selling is lucrative with this 75% return buying to cover Baytex Energy Corp.
Cheers to your investment success.
