15 Worst 52-Week Low Stocks to Buy Now According to Short Sellers

7. Valaris Limited (NYSE:VAL)

52 Week Range: $53.06 – $84.20

Current Share Price: $55.31

Short% of Shares Outstanding: 12.17%

Number of Hedge Fund Investors in Q2 2024: 39

Valaris Limited (NYSE:VAL) is an energy company that provides offshore drilling services in the Gulf of Mexico. It owns an offshore drilling rig fleet, which includes drill ships, dynamically positioned semi submersible rigs, moored semi submersible rigs, and jack-up rigs.

The broader energy sector has been under pressure after growing concerns about the global economy amid the high interest rates. Growth in the US economy showing signs of slowing down has rattled sentiments in the oil industry.

Worldwide oil demand is slowing down, reflecting challenges in the global economic environment, particularly due to China’s slowing economic growth. Consequently, oil prices plunging from above $80 a barrel to lows of $71 a barrel has only spelled doom for Valaris.

Lower oil prices make it hard for oil producers to increase spending on exploration and drilling activities. Reduced spending essentially translates to reduced demand for the Valaris Limited (NYSE:VAL) drilling rig fleet, making it challenging to enjoy higher revenue and earnings growth rates.

Valaris Limited (NYSE:VAL) delivered solid second-quarter results, with net income increasing to $151 million from $26 million in the first quarter as revenue increased 16% to $610 million from $525 million in the first quarter. Investors have been skeptical about the company’s prospects heading into year-end, with oil prices plunging to lows of $71 a barrel amid the slowing global economy.

39 out of 912 hedge funds tracked by Insider Monkey held stakes in Valaris Limited (NYSE:VAL) as of the end of Q2 2024. William B. Gray’s Orbis Investment Management is the leading shareholder of the company with 5.82 million shares worth $433.39 million.

Here is what Praetorian Capital said about Valaris Limited (NYSE:VAL) in its Q2 2024 investor letter:

“Valaris Limited (NYSE:VAL) has been range bound for over two years now, awaiting the signing of new contracts at current market rates, that will replace expiring contracts that are frequently less than half of current prevailing rates. There have been some questions as to why the company has been slow to sign new contracts. However, I believe that management is trying to trade a slightly reduced price for increased duration of contract tenure, and that’s the reason for a lack of commentary on new contracts. Should the company announce new contracts at anywhere near current market rates, I believe that the shares will respond in a rather dramatic way—especially as Valaris is by far the cheapest of the large drilling companies (based on the enterprise value per rig metric), despite having one of the best fleets and strongest balance sheets. Between our common and warrant position, Valaris was our 2nd largest position at the end of June.”