A variety of energy stocks are facing a new threat, and for once, we’re not talking about increasing regulation or potential fracking bans.
According to ratings agency Moody’s, the energy sector will continue to be a hotbed of activist activity going forward, and the number of targets in the sector could intensify this year.
Activist investors and hedge funds — like Carl Icahn or Elliott Management — have set their sights on several “bloated” energy firms that need … er, a slight push in the right direction. As they see it, many independent energy stocks have simply not delivered on their promises, debt levels are too high and production has been too low. The nagging result, of course, has been sagging share prices.
But by implementing new cost-controls and execution methods, as well as spinning off noncore assets, these activist investors hope to right the ship at several of these energy stocks. (Or at least make a quick buck via hefty special dividends.)
While that does reek of short-term thinking, there’s no denying that, on occasion, meddling by activist investors does help the individual investor. So, here are four energy stocks to keep an eye on, as they’re either already or soon to become targets for activists: