Alexander Roepers, founder and chief investment officer of Atlantic Investment, said oil services company Weatherford International is a ripe takeover target and he said the company’s stock price will soar. Ropers, who has previously made a series of accurate predictions about successful mergers and acquisitions, believes Weatherford will soon be acquired by the likes of Schlumberger or Halliburton. The Texas-based Weatherford company has had a rough few years. The company became over-leveraged due to massive acquisitions and nearly went bankrupt in 2020. track. He expects the stock to rise about 60% to $195 over the next 12 to 18 months. WFRD 5Y Line, a stock picker who runs a concentrated fund that holds only a handful of stocks, explained that Weatherford’s adjusted margins are now close to those of industry leader Schlumberger. However, the company’s shares are trading at a “significant discount.” That undervaluation helps make it a ripe takeover target, Ropers said. Atlantic Investment bought the stock last year when it was trading at $58 a share. The stock has since risen about 110%. “I’m brave enough to recommend buying it here,” Ropers told professional investors at the Value Investor Conference in London on May 15. Atlantic Investment’s Cambrian fund is up about 40% in the past year, according to Ropers said. Perfect track record Ropers has managed Atlantic Funds for 36 years and has an outstanding track record in identifying M&A targets. Two years ago, he recommended three stocks at the Value Investor Conference, one of which was Rheinmetall, which turned out to be a “complete home run.” The German defense company’s shares have risen 188% since May 19, 2022, following Russia’s invasion of Ukraine. The other two companies, Univar Solutions and West Rock, were acquired by private equity giants Apollo and Smurfit Kappa respectively, bringing considerable gains to Atlantic Investment. Most recently, Atlantic won an investment in British company DS Smith. When the company initially invested in DS Smith, the stock was trading at £280 ($3.54) per share. When rival Mondi made a bid that pushed the price to 370p, Roepers decided the stock was still undervalued and decided to hold its position. The hedge fund manager was rewarded when another US-listed rival, International Paper, entered the bidding arena, sending shares soaring to more than 400 pence a share. SMDS-GB 1Y line Atlantic Investment ended up selling their position as they believed the company was worth between 450 and 500 pence. When asked about his approach to selling stocks, Ropers emphasized the importance of discipline. “We always buy early and I always sell early. That’s the discipline you have to maintain. You can’t just buy and hold,” he said. “Because cows make money, bears make money, and pigs get slaughtered.”
