Overview of the Recent Transaction
On September 30, 2024, Hotchkis & Wiley, a renowned investment firm, strategically increased its stake in APA Corp (APA, Financial), an independent oil and gas exploration and production company. The firm acquired an additional 3,411,270 shares, priced at $24.46 each, bringing its total holdings in APA Corp to 30,471,834 shares. This transaction not only reflects a 12.61% increase in their previous holdings but also impacts their portfolio by 0.29%, solidifying APA Corp as a significant asset in their investment strategy.
Profile of Hotchkis & Wiley
Founded in 1980 in Los Angeles, Hotchkis & Wiley stands out for its dedicated approach to value investing. The firm prioritizes undervalued companies with strong potential for appreciation, focusing on tangible assets, sustainable cash flow, and potential for business performance improvement. With a robust portfolio of 482 stocks, their top holdings include notable names such as Telefonaktiebolaget L M Ericsson (ERIC, Financial), F5 Inc (FFIV, Financial), and Citigroup Inc (C, Financial). Hotchkis & Wiley manages an equity portfolio valued at approximately $30.1 billion, with significant positions in the Financial Services and Technology sectors.
Insight into APA Corp
APA Corp, headquartered in Houston, Texas, was established in 1969 and has grown to become a key player in the oil and gas industry. The company boasts a diversified operation across the United States, Egypt, the North Sea, and Suriname. As of the end of 2023, APA Corp reported proved reserves of 807 million barrels of oil equivalent and a daily production of 405 thousand barrels of oil equivalent. The company's revenue streams are primarily derived from natural gas liquids, oil, and purchased oil and gas sales.
Impact of the Trade on Hotchkis & Wiley’s Portfolio
The recent acquisition has increased Hotchkis & Wiley’s position in APA Corp to 8.24% of the total shares outstanding, making it a significant holding within their portfolio. This move aligns with the firm's investment philosophy of capitalizing on undervalued assets to ensure long-term value creation.
Market Performance and Valuation of APA Corp
Currently, APA Corp's stock is trading at $22.60, which is a 7.6% decrease from the price at the time of Hotchkis & Wiley's acquisition. The stock's performance has been underwhelming with a year-to-date decline of 37.41%. Despite these figures, APA Corp holds a GF Score of 68/100, indicating potential for future performance. The company's GF Value is assessed at $33.06, suggesting that the stock might currently be undervalued, which aligns with Hotchkis & Wiley’s investment strategy.
Comparative and Future Outlook
Other notable investors in APA Corp include Bill Nygren (Trades, Portfolio), Smead Value Fund (Trades, Portfolio), and Ken Fisher (Trades, Portfolio), highlighting the stock's popularity among value-focused portfolios. Looking forward, despite the current market challenges, APA Corp's strategic positioning and operational focus in lucrative regions could drive its future growth, potentially validating Hotchkis & Wiley's recent investment decision.
In conclusion, Hotchkis & Wiley’s increased stake in APA Corp underscores their confidence in the stock’s value proposition. Given the firm's strategic investment criteria and APA Corp’s potential for improvement, this transaction could well be a pivotal move in their portfolio, poised for future gains.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
