Alexander Roepers Sees Acquisition Potential in Weatherford Internationa
Alexander Roepers, the founder and chief investment officer of Atlantic Investment, has identified Weatherford International as a compelling takeover target. Known for his acumen in predicting successful mergers and acquisitions, Roepers believes that Weatherford’s stock is poised for a significant upswing, potentially rising by 60% to reach $195 within the next 12 to 18 months. This prediction is based on the company’s improved financial health and strategic positioning in the market.
Weatherford’s Path to Recovery
Headquartered in Texas, Weatherford International has faced substantial challenges over the past few years. The company grappled with over-leveraging due to extensive acquisitions, nearly leading to bankruptcy in 2020. However, under new leadership, Weatherford has successfully restructured its balance sheet, setting a promising trajectory for the future. Roepers highlighted this turnaround, noting that the company’s adjusted profit margins are now comparable to those of Schlumberger, an industry leader, yet Weatherford’s shares continue to trade at a significant discount.
A Calculated Investment
Roepers and his team at Atlantic Investment recognized the potential early on, purchasing shares at $58 last year. Since then, Weatherford’s stock has surged by approximately 110%. Speaking at the London Value Investor Conference on May 15, Roepers confidently recommended the stock, emphasizing its undervaluation and strong potential for acquisition by industry giants like Schlumberger or Halliburton.
Atlantic Investment’s Performance and Strategy
The Cambrian Fund, managed by Roepers at Atlantic Investment, has seen substantial gains, up about 40% over the past year. Roepers’ strategy involves maintaining a concentrated portfolio, typically holding a limited number of stocks. This focused approach has yielded impressive results, including a series of successful M&A predictions.
Track Record of Successful Picks
Roepers’ expertise in identifying lucrative M&A targets is well-documented. Two years ago, at the same conference, he recommended three stocks, including Rheinmetall, which soared by 188% following geopolitical developments. The other two recommendations, Univar Solutions and WestRock, were acquired by private equity firms Apollo and Smurfit Kappa, respectively, resulting in significant gains for Atlantic Investment.
Recent Wins and Strategic Sales
More recently, Roepers’ decision to invest in DS Smith, a British packaging company, paid off handsomely. Initially buying in at 280 British pence per share, Roepers held his position even after a bid by competitor Mondi raised the price to 370 pence. The stock eventually surged above 400 pence when International Paper entered the bidding war, prompting Atlantic Investment to sell, believing the company’s true value lay between 450 and 500 pence.
Emphasizing Discipline
Roepers attributes his success to disciplined investment strategies. He underscores the importance of timely buying and selling, adhering to a principle that has served him well over his 36-year career. “We’re always a little early buying in, and I’m always a little early selling out. And that’s the discipline that you got to maintain. You can’t just buy and hold,” Roepers explained. “Because bulls make money, bears make money, and pigs get slaughtered.”
Conclusion
Alexander Roepers’ latest endorsement of Weatherford International underscores his reputation as a savvy investor with a keen eye for undervalued assets. With a proven track record and disciplined approach, Roepers’ insights continue to guide Atlantic Investment towards significant gains, making Weatherford a stock to watch in the coming months.
