JANA Partners sells Civeo over stock’s downward spiral
JANA Partners, Greenlight Capital hit by Civeo Corporation slide (Part 1 of 7)
JANA Partners sells Civeo Corporation shares
In a recent 13D filing, billion-dollar hedge fund JANA Partners said it had sold its shares in Civeo Corporation (CVEO). The filing said the fund sold a little more than 12 million Civeo shares at ~$4 a share. JANA Partners’ 13D filing in June 2014 revealed an 11.5% stake with 12,241,760 common shares in Civeo Corporation.
Market Realist reported previously that both JANA and Greenlight Capital had taken activist positions in Civeo last year in order to benefit from the company’s potential REIT conversion.
Overview of Civeo
Civeo was spun off from drilling equipment provider Oil States International (OIS) in May 2014. It provides remote site accommodations, logistics, and facility management services to the global natural resource industry. Its operations are mainly in Canada, Australia, and the US. Civeo’s customers include major and independent oil and natural gas companies, mining companies, and oilfield and mining service companies.
Civeo in JANA and Greenlight Capital’s portfolio
The above table shows that Civeo Corporation’s -56%returns have been among the lowest of stocks also held by JANA Partners:
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eBay (EBAY) – 11%
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PetSmart (PETM) – 18%
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SuperValu (SVU) – 8%
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Amgen (AMGN) – 21%
According to David Einhorn’s 3Q investor letter on behalf of Greenlight Capital, the fund’s investment in Civeo generated a loss. At the end of September, Greenlight owned 6,154,400 Civeo shares worth ~$71 million, according to the 3Q 13F filing. A 13D filing in October said the fund acquired more shares and raised its stake to 9.9%. Greenlight owns 10,658,929 shares in Civeo.
Civeo shares fall by more than 50%
JANA’s share sale comes just two months after the fund nominated three independent directors to Civeo’s board. This sale ends a six-month investment during which the share price of Civeo nose-dived by over 82% since being spun off from Oil States International.
The accommodation provider’s stock price has been negatively impacted since September 29, 2014, when it shelved plans to convert into a REIT.
JANA’s share sale also comes a day after Civeo announced that the firm faces a gloomy 2015. The company cut its financial projections due to a steep decline in oil prices that has caused vacancy rates at the lodges owned by Civeo to increase by almost 50%.
More on the impact of declining oil prices in the next part of this series.
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