Pumpjacks at work pumping crude oil near Stettler, Alta., June 20, 2007. Alberta's oil pipeline hub, where millions of barrels of crude flow each day to pipelines that feed markets in Canada and the United States is a beehive of activity.Larry MacDougal/The Canadian Press
Activist investor Orange Capital is taking advantage of a sell-off in Bellatrix Exploration Ltd. to almost double its position in the energy producer.
Orange Capital said in August that it was going to push for change at the Calgary-based company. The stock jumped, but has since sold off. Orange is not backing away.
The hedge fund reported Friday that it now owns 9.2 per cent of Bellatrix. Orange went public first last month when its stake crossed 5 per cent.
In the meantime, Orange is said to be trying to engage Bellatrix on its plan to up the shares. What's not clear is how much the company is willing to play along, and whether there's momentum among other shareholders and company followers that will help Orange really crank up the pressure.
Analysts have long said that Bellatrix is cheap relative to its peers. And plenty of analysts rate it a buy, expecting big upside when that discount fades. That is more or less what Orange is arguing.
What's interesting is what so many of the analysts are not saying – that is, anything about Orange. Sell-side analysts from firms such as CIBC, Altacorp and Canaccord Genuity have recently published notes on Bellatrix, and there is nothing to be found about Orange.
That points to a level of skepticism that Orange is going to have to overcome. It may be down to the fact that few people in Calgary know much about Orange, a New York-based firm, or the fact that Orange has not released a lot of details. Orange has taken a softer approach and not talked too much publicly about its plan or potential replacements at Bellatrix should it come to a real push to change the board and management.
The fact that Orange is committed enough to keep buying through a recent sell-off in Bellatrix stock, and to amass a stake that is now worth about $120-million at current stock prices, may help allay some of that doubt and get Orange a little more credit.