Guru Andreas Halvorsen (Trades, Portfolio) is a Norwegian hedge fund executive who co-founded Viking Global Investors LP in 1999. Halvorsen graduated from the Norwegian Naval Academy and then went on to become a Norwegian Navy Seal.
Halvorsen graduated from Williams College located in Massachusetts with a degree in economics. He then received his MBA with the highest honors from the Stanford School of Business in 1990. Upon graduating, Halvorsen began his investment career at Morgan Stanley (MS), where he began working in the investment banking division. Halvorsen then seized a tremendous opportunity to work alongside legendary guru Julian Robertson (Trades, Portfolio) at Tiger Management, where he was able to gain a tremendous amount of experience and expertise.
Halvorsen used the tactics, philosophies and mental models that he learned early on in his investment career to form Viking Global Investors, which currently manages more than $30 billion in capital for investors and has locations in Greenwich Connecticut, Hong Kong, London and New York.
In the first quarter of 2016, Halvorsen raised his stake six-fold in Range Resources Corp. (RRC, Financial).
Range Resources was formed in 1976 as Lomak Petroleum Inc. and the name was later changed to Range Resources Corporation when the company was incorporated in 1980. The company is a Fort Worth, Texas-based independent natural gas, NGLs and oil company, engaged in the exploration, development and acquisition of natural gas and oil properties, mostly focused in the Appalachian region of the U.S.
Range Resources has a market cap of $5.64 billion, an enterprise value of $8.29 billion, a P/B ratio of 2.05 and a quick ratio of 1.15.
Andreas Halvorsen (Trades, Portfolio) may have decided to increase his stake six-fold for the following reasons:
- Range Resources increased its average total production to 1,395.4 Mmcfe per day, an increase of 20% from 2014.
- The company’s total natural gas production in 2015 was 362.7 BCF, an increase of 26% from 2014.
- Oil prices are currently low, and Halvorsen knows that Range Resources is doing a good job within the company to increase productivity. If oil prices can rise once again, Halvorsen is investing in a company that has been building momentum by increasing production with the potential of oil prices rising in the future. If oil prices rise, this could drastically increase the market price for the company.
According to the company’s most recent 10-K filing, Range Resources has been adapting to low commodity prices within their industry.
"As a result of the significant drop in commodity prices, we took action to reduce capital spending, operating costs and general and administrative costs. We lowered our 2015 capital expenditure budget that was announced in December 2014 from $1.3 billion to $870 million."
This statement could have easily influenced Halvorsen's decision to raise his stake in the company. The fact that Range Resources has been able to adjust to a volatile industry while still expanding is a good sign.
According to GuruFocus, Range Resources has a 6/10 Financial rating and a 7/10 Profitability and Growth rating. The company has an operating margin of 10.63%, which ranks it higher than 80% of the companies in the industry.
Halvorsen likely decided to increase six-fold because Range Resources has been expanding successfully while also cutting its operation costs. Halvorsen may also be betting big on this company because of the current low oil prices. Halvorsen knows that if oil prices rise, so will the price of Range Resources.
Cheers to your investment success.
Disclaimer: Author does not currently own any shares of this stock.
