William B. Gray‘s Orbis Investment Management has picked up its stake in NOW Inc (NYSE:DNOW) to 10.72 million shares from 10.46 million shares, according to a new filing with the US Securities and Exchange Commission. Following the acquisition of additional shares, Orbis’ passive stake amasses slightly over 10% of NOW’s common stock.
Orbis Investment Management is a relatively large fund with offices in many big cities such as London, Hong Kong or Sydney. The fund owns an equity portfolio worth over $12 billion that is commited to long-term investments in Technology, Basic Materials and Services stocks, among others. The largest holding is represented by NetEase, Inc (ADR) (NASDAQ:NTES), which amasses almost 11% of the equity portfolio and of which the fund owns around 16.98 million shares. Orbis has been holding shares of NetEase for several years, while the stock has been on an upward trend, gaining around 40% over the last year. However, the next two top holdings have not performed so well. Motorola Solutions Inc (NYSE:MSI), of which Orbis owns around 11.99 million shares, representing 6.6% of the equity portfolio, inched up by around 1.50% over the last 52 weeks, while Weatherford International Plc (NYSE:WFT), of which Orbis holds 34.39 million shares, which amass 6.50%, slid by 32%.
In NOW, Orbis initiated a stake during the second quarter, when the company went public, after being spun-off from National Oilwell Varco. The shareholders of Oilwell received one share of NOW Inc (NYSE:DNOW) for every four shares of Oilwell, although Orbis was not among the shareholders of Oilwell and probably acquired shares on the open market. Aside from Orbis another shareholder of NOW is Warren Buffett‘s Berkshire Hathaway, which in its latest 13F reported ownership of 1.83 million shares, which have been received after the spin-off, since Berkshire is also a shareholder of Oilwell Varco, holding 7.30 million shares as of the end of June.
NOW Inc (NYSE:DNOW) is engaged in distribution of oil and gas products operating in the US, Canada, and other countries. The stock of NOW lost around 10% since it started trading. Around a week after Orbis raised its position, NOW reported its financial results for the third quarter, posting an increase in its net income to $0.30 per share from $0.25 per share for the second quarter of the year, while its revenue increased by 12% on the quarter to around $1.07 billion. However, the earnings still came short of the consensus forecast of around $0.33 per share. For the full 2014, NOW is expected to report earnings of $1.34 per share.
With the oil prices falling, stocks of companies engaged in the oil and gas industry are expected to decline, which is why we have seen many investors shorting their positions over the last several weeks. Fir Tree Partners has recently cut its stake in Noble Corp plc (NYSE:NE), last reporting ownership of 15.29 million shares, versus 24.5 million shares held previously. Moreover, Barry Rosenstein’s JANA Partners sold its entire position in QEP Resources Inc (NYSE:QEP) and John Paulson‘s Paulson & Co. has been trimming its exposure to Cobalt International Energy, Inc. (NYSE:CIE) last reporting the sale of 103,500 shares, cutting its stake to 41.75 million shares.
With this in mind, Orbis’ raising its position in NOW Inc (NYSE:DNOW) comes a little as a surprise, but the position has been increased slightly and the fund could’ve been buying shares hoping for a rebound of the stock. Analysts suggest holding the stock and recently Zacks downgraded the stock to Underperform from Neutral with a target price of $26.60.
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