Hotchkis & Wiley Global Value Fund on APA Corporation
Thesis
Hotchkis & Wiley owns APA for its leverage to what it views as a structurally undersupplied global energy market. The stock fell as oil prices retreated on optimism that the Iran conflict would be resolved, but quarterly operating results were in line with expectations and supportive of the existing thesis. The manager also emphasizes that APA can generate strong free cash flow across a range of commodity-price environments, providing some resilience around the core energy-supply thesis.
“What really excites us about APA is that it remains leveraged to a structurally undersupplied global energy market.”
Key risks
- Falling oil prices as geopolitical risk eases