Howard Marks' (Trades, Portfolio) Oaktree Capital Management disclosed on Monday that it boosted its Berry Petroleum Corp. (BRY, Financial) stake by 65.14%.
On its website, the Los Angeles-based alternative asset management firm says it focuses on delivering superior results while observing its six-tenet investment philosophy: risk control, consistency, market inefficiency, specialization, bottom-up analysis and disavowal of market timing.
According to GuruFocus Real-Time Picks, a Premium feature, Oaktree invested in 5.08 million shares of the Bakersfield, California-based company on June 12. It now holds 12.89 million shares, which represent approximately 3.65% of the equity portfolio. The stock traded for an average price of $10.19 per share.
GuruFocus estimates the firm has lost 2.8% on the investment since establishing the holding in the first quarter.
The oil and gas producer, which has operations throughout the U.S., has an $866.28 million market cap; its shares were trading around $10.58 on Tuesday with a price-earnings ratio of 20.37, a price-book ratio of 0.92 and a price-sales ratio of 1.12.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
On May 8, Berry Petroleum reported its first-quarter results, posting adjusted earnings of 30 cents per share on $76.54 million in revenue. The company missed Zacks Investment Research’s earnings forecast of 31 cents per share on $146.13 million in revenue.
The board of directors also declared a quarterly dividend of 12 cents per share, which will be paid on July 15.
GuruFocus rated Berry Petroleum’s financial strength 5 out of 10. In addition to having insufficient interest coverage, the Altman Z-Score of 1.63 warns the company is at risk of going bankrupt.
The company’s profitability and growth fared even worse, scoring a 3 out of 10 rating. Although its margins and returns are positive, they still underperform a majority of competitors.
As of the end of the first quarter, Marks’ firm is the company’s largest guru shareholder with 9.53% of outstanding shares. Investment firm Hotchkis & Wiley, George Soros (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Louis Moore Bacon (Trades, Portfolio) also have positions in the stock.
Portfolio composition
The firm’s $3.87 billion equity portfolio, which is composed of 82 stocks, is largely invested in the industrials, financial services and utilities sectors. Energy stocks account for only 8.31% of the portfolio.
Additional energy-related companies the firm is currently invested in include Cimarex Energy Co. (XEC, Financial), CNOOC Ltd. (CEO, Financial), Bonanza Creek Energy Inc. (BCEI, Financial), Halcon Resources Corp. (HK, Financial), Bellatrix Exploration Ltd. (BXEFD, Financial), SandRidge Energy Inc. (SD, Financial) and Extraction Oil & Gas Inc. (XOG, Financial), among others.
Disclosure: No positions.
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