Weatherford International Poised for Potential Acquisition, Says Veteran Investor Alexander Roepers

TipsForTraders | May 20, 2024

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The prospect of a takeover is looming over Weatherford International, with seasoned investor Alexander Roepers of Atlantic Investment positioning the oil services firm as a prime target. Roepers, renowned for his prescient predictions in mergers and acquisitions, suggests that industry giants such as Schlumberger or Halliburton might soon make a move to acquire Weatherford. This speculation arises after a tumultuous period for the Texas-based company, which nearly faced bankruptcy in 2020 due to heavy debts incurred from substantial acquisitions.

Roepers, who has led Atlantic’s funds for over three decades, points to a revitalized Weatherford under its new management, which has successfully restructured its financials and aligned its adjusted profit margins close to those of Schlumberger, the industry leader. Despite these improvements, Weatherford’s stock (WFRD) remains undervalued—a fact that not only highlights its investment appeal but also marks it as a likely acquisition candidate. Last year, Atlantic Investment seized the opportunity to buy Weatherford shares at $58 each, a move that has since yielded a 110% return as the shares climbed.

The broader implications of Roepers’s strategy extend beyond Weatherford. At the London Value Investor Conference, he confidently projected that Weatherford’s stock could surge by approximately 60%, reaching $195 within the next 12 to 18 months. His optimism is backed by a strong track record, evidenced by Atlantic Investment’s Cambrian Fund, which has enjoyed a 40% growth over the past year.

Roepers’s knack for identifying potential M&A targets is well-documented. At the same investor conference two years ago, he pinpointed Rheinmetall as a stock to watch. Following geopolitical shifts, notably Russia’s invasion of Ukraine, Rheinmetall’s stock has soared by 188% since his recommendation. Other notable investments include Univar Solutions and West Rock, both of which saw successful acquisitions by major players like Apollo and Smurfit Kappa, respectively.

Another example of Roepers’s strategic foresight came with DS Smith, a British firm that attracted bids from Mondi and later International Paper, which escalated its stock value significantly above Roepers’s purchase price. Despite the temptation to hold, Roepers chose to sell, reinforcing his philosophy of disciplined investing—buying early and selling slightly early to avoid the pitfalls of greed, which he summarizes with the adage: “Bulls make money, bears make money, and pigs get slaughtered.”

In conclusion, Alexander Roepers’s analytical approach and his ability to anticipate market movements have positioned him as a key figure in investment circles. His predictions for Weatherford International not only shed light on the potential shifts in the oil services sector but also underscore the strategic maneuvers investors might consider in a landscape ripe for consolidation. Whether Weatherford will indeed fall under the umbrella of a larger entity remains to be seen, but the anticipation of such moves continues to stir interest among professional investors.