OFF-CYCLE TRADE: TAKING PROFITS ON VAL AND INITIATING BUY POSITIONS IN CNX, FTI & WTS
As we detail below, our thesis on Valaris Limited (VAL) was playing out well when it was bought out by Transocean Ltd. (RIG). On February 9th, the deal was announced that RIG would acquire VAL in an all stock deal and the stock rose 34% in a single day. Since then, the stock is up 59% and will now track the performance of RIG until the deal closes. VAL stock has been an outstanding performer in our portfolio, jumping 225% over the last twelve months. Having done extensive work on RIG, we believe there could be material upside but unlike VAL which had a clean balance sheet, RIG has significant amounts of debt. We are selling VAL (RIG) and allocating to other opportunities in Energy and Industrials as explained below.
VALARIS LIMITED (VAL): SELL ALL
Quick Notes:
- Our offshore drilling thesis played out as deepwater fundamentals improved and Valaris’ premium fleet remained well positioned.
- The Transocean merger changes the thesis, leaving shareholders with a more leveraged offshore driller carrying roughly $5.7 billion of net debt.
- After a 225% gain over the last year, the risk/reward no longer looks as compelling, so we are exiting and reallocating capital.
Summary:
Valaris was an excellent investment, but the merger with Transocean materially changes the opportunity. Instead of continuing to own a high-quality offshore driller with a clean balance sheet, investors will receive a more leveraged company at a less forgiving valuation. While scale and synergy benefits may emerge, our process dictates that we wait to see the evidence. We are selling the position, locking in strong gains, and redeploying capital into ideas with a more attractive risk/reward.
OFF-CYCLE TRADE: TAKING PROFITS ON VAL AND INITIATING BUY POSITIONS IN CNX, FTI & WTS – March Q1 2026
Table of contents
When
April 2, 2026
Who
Matthew Malgari
Dr. Sanjeev Bhojraj
Nathan Przybylo
OFF-CYCLE TRADE: TAKING PROFITS ON VAL AND INITIATING BUY POSITIONS IN CNX, FTI & WTS
As we detail below, our thesis on Valaris Limited (VAL) was playing out well when it was bought out by Transocean Ltd. (RIG). On February 9th, the deal was announced that RIG would acquire VAL in an all stock deal and the stock rose 34% in a single day. Since then, the stock is up 59% and will now track the performance of RIG until the deal closes. VAL stock has been an outstanding performer in our portfolio, jumping 225% over the last twelve months. Having done extensive work on RIG, we believe there could be material upside but unlike VAL which had a clean balance sheet, RIG has significant amounts of debt. We are selling VAL (RIG) and allocating to other opportunities in Energy and Industrials as explained below.
VALARIS LIMITED (VAL): SELL ALL
Quick Notes:
Summary:
Valaris was an excellent investment, but the merger with Transocean materially changes the opportunity. Instead of continuing to own a high-quality offshore driller with a clean balance sheet, investors will receive a more leveraged company at a less forgiving valuation. While scale and synergy benefits may emerge, our process dictates that we wait to see the evidence. We are selling the position, locking in strong gains, and redeploying capital into ideas with a more attractive risk/reward.