Third Point eliminates position in YPF SA
Key highlights of Third Point's fourth quarter 13F (Part 10 of 12)
Third Point and YPF
During the fourth quarter, Third Point exited its position in YPF SA (YPF) through the sale of 3.75 million shares. YPF had earlier accounted for 1.6% of the fund’s portfolio. In addition to YPF, the fund made quite a few trades in the energy sector, including adding new positions in Phillips 66 (PSX) and Rice Midstream Energy Partners (RMP), and exiting its position in Biofuel Energy (GRBK).
Investors looking to gain exposure to the energy sector can consider the Energy Select Sector SPDR ETF (XLE). The ETF’s top two holdings, Exxon Mobil (XOM) and Chevron Corporation (CVX), account for nearly 31% of its portfolio size.
About YPF
YPF is Argentina’s leading energy company with fully integrated oil and gas operations across upstream and downstream segments. Its upstream operations are engaged in the exploration, development, and production of crude oil, natural gas, and liquefied petroleum gas. Its downstream operations consist of refining, retail marketing, and the transportation and distribution of oil and a wide range of petroleum products.
The company is also active in other areas, including gas separation and natural gas distribution both directly and through its subsidiaries. The company had total assets of $26.0 billion as of the third quarter ending September 30, 2014, and generated revenues of $13.8 billion in fiscal year 2013.
The company’s strategic and business choices are supervised by the Argentine government, which has held a 51% stake since it nationalized the company in 2012. The company currently produces about 240,000 barrels per day of oil and about 43.5 million cubic meters of gas per day.
YPF posts solid growth in output and earnings
YPF’s revenue grew 6% YoY (year-over-year) to $4.6 billion in 3Q14. This growth was driven by a 4.6% increase in oil output and a 26.1% increase in natural gas production from the same period a year earlier. The company’s EBITDA (or earnings before interest, taxes, depreciation, and amortization) adjusted for one off expenses increased 38% YoY to reach $1.6 billion due to the volume and sales growth. The state run company’s net profit came to $378 million, reflecting an increase of ~52% from the corresponding quarter last year.
Miguel Galuccio, the company’s chief executive, commented, “We are meeting our goals and continue to show results in line with our plan for the next five years.”
YPF issues bonds for the first time since the Argentine default
On February 4, 2015, YPF issued $500 million in add-on notes to its outstanding notes maturing in 2018 and 2024. The bond sale was short by $250 million of what the state-run company originally proposed. This marked the first international sale by Argentina since its default back in July last year, and it was aimed at boosting investment volumes with a long-term aim of ramping up production. Moody’s has currently equated YPF’s bond rating to that of the Argentine government at Caa1 (high yield or junk grade status) with a negative outlook reflecting the economic uncertainty in Argentina.
Third Point’s key positions in 4Q14
In 4Q14, Third Point added new positions in Citigroup (C), EMC (EMC), and Phillips 66 (PSX). The fund increased its stake in Amgen (AMGN), Alibaba (BABA), and eBay (EBAY). The fund’s notable exits in the fourth quarter included Coca-Cola (KO), Bed Bath & Beyond (BBBY), and YPF Sociedad Anonima (YPF). In addition, the fund lowered its position in Ally Financial (ALLY) and Dow Chemical (DOW).
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