Magnetar Capital and Teekay Corp.
Magnetar Capital added new positions in Alibaba Group (BABA), TransCanada Corp. (TRP), and Encana Corp. (ECA). The fund’s top exits were Covidien Plc (COV), Lamar Advertising (LAMR), and Yahoo (YHOO). The fund added to its stakes in Shire Plc (SHPG), Exterran Holdings (EXH), and Teekay Corp. (TK). Its top stake decreases were in Williams Companies (WMB), Mallinckrodt Plc (MNK), and American Airlines (AAL).
Magnetar increased its position in TK in the third quarter. The position accounts for 7.67% of the fund’s total portfolio in the third quarter.
TK is a portfolio manager and project developer in the marine-midstream space. It owns a 2% general partner interest, all of the outstanding incentive distributions rights, and a portion of the outstanding limited partner interests in Teekay LNG Partners LP (TGP) and Teekay Offshore Partners LP (TOO).
TK has a controlling ownership interest in Teekay Tankers Ltd. (TNK) and a fleet of directly-owned vessels. TK’s combined entities manage and operate consolidated assets of over $12 billion. The assets include over 190 liquefied gas, offshore, and conventional tanker assets. With offices in 15 countries and ~6,700 seagoing and shore-based employees, TK provides a comprehensive set of marine services to the world’s leading oil and gas companies. Its reputation for safety, quality, and innovation earned it a position with its customers as the marine midstream company.
Third quarter earnings lower than expectations
News releases noted that TK’s third quarter results were lower than anticipated. The lower results were due to lower-than-expected production on the Foinaven FPSO (floating production, storage, and offloading) unit relating to subsea issues. It was also due to the delayed startup of the Banff FPSO and the HiLoad dynamic positioning, or DP, unit charter contract.
Net revenues for 3Q14 increased to $456 million—compared to $426.8 million for the same period last year. Adjusted net loss attributable to its stockholders was $12.6 million, or $0.17 per share, for the quarter ending September 30, 2014—compared to adjusted net loss attributable to its stockholders of $36 million, or $0.51 per share, for the same period last year.
3Q14 total cash flow from vessel operations increased by 29%—compared to the same period last year.
In September 2014, TK announced its intention to increase its dividend by 75%–80%. Future increases would mainly be linked to growing cash flows from its two MLPs’ (master limited partnerships) subsidiaries—TGP and TOO.
In September 2014, the Petrojarl Knarr FPSO was offered for sale to TOO. The FPSO unit arrived in Norway. It’s expected to start its charter contract in December 2014.
The next part of this series will review Magnetar’s lowered positions during the third quarter.