Alexander Ropers, founder and chief investment officer of Atlantic Investments, says oil services company Weatherford International is a great takeover target and its stock price will soar. Ropers, who has made a series of accurate bets predicting the success of mergers and acquisitions, believes Weatherford will soon be acquired by a company like Schlumberger or Halliburton. It comes after a difficult few years for Texas-based Weatherford. The company suffered from over-leveraging due to large-scale acquisitions and came close to bankruptcy in 2020. But Ropers said Weatherford has successfully restructured its balance sheet under new management and is now on a promising trajectory. 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 with only a few stocks explained that Weatherford’s adjusted return is currently close to that of industry leader Schlumberger. Despite this, the company’s shares were trading at a “significant discount.” That undervaluation helps make the company an acquisition target, Ropers said. Atlantic Investments bought the stock last year when the stock price was $58 per share. Since then, the stock price has increased about 110%. “I’m brave in recommending that you buy here,” Ropers told a group of professional investors at the Value Investors Conference in London on May 15. Atlantic Investments’ Cambrian Fund is up about 40% over the past year. Impeccable track record Having run Atlantic’s funds for his 36 years, Mr. Roepers has a proven track record when it comes to identifying M&A targets. Two years ago, he recommended three stocks at the Value Investors Conference, one of which was Rheinmetall, which proved to be a “complete home run.” The German defense company’s stock price has risen 188% since May 19, 2022, following Russia’s invasion of Ukraine. His two remaining companies, his Univar Solutions and West Rock, were acquired by private equity giants Apollo and Smurfit Kappa, respectively, resulting in significant profits for Atlantic Investment. Most recently, Atlantic scored a winning investment in British company DS Smith. The company originally invested in DS Smith shares when they were trading at 280 British pence ($3.54) per share. When rival Mondi made a bid and the price rose to 370p, Mr Ropers decided to hold on to his position, believing the stock was still undervalued. The hedge fund manager was rewarded when another US-listed competitor, International Paper, entered the bidding arena, sending its share price soaring by more than 400 pence per share. Atlantic Investments on the SMDS-GB 1Y line ultimately sold its position, believing the company was worth between 450p and 500p. Asked about his approach to selling stocks, Ropers emphasized the importance of discipline. “We’re always buying a little early, and I’m always selling a little early, and that’s the discipline you have to maintain. You can’t just buy and hold,” he said. “For the bull will make money, the bear will make money, and the pig will be slaughtered.”
