New York - Elliot Management and Omega Advisors are among activist hedge funds buying stakes in North American oil and gas producers whose stock has fallen because of weaknesses exposed by the collapse of energy prices.
It's a bet on a view that's contrary to some analysts: that oil prices are poised to rebound. This month Citigroup cut its crude price forecasts, saying West Texas Intermediate could go as low as $20 a barrel before recovering. West Texas crude is currently at about $51 a barrel, up from a low of $43.58 in January.
Still, oil prices are down 50% from last June, leaving many energy company stocks looking cheap. A Reuter’s review of regulatory filings, as well as interviews with more than two dozen company executives, investment bankers, lawyers and investors, reveal that many hedge funds are seizing the opportunity to buy shares on the cheap.