James C. Roumell is President and Lead Portfolio Manager at Roumell Asset Management. He invests using a deep value strategy, and he revealed in a recent interview that he was “fortunate enough to develop a relationship with Marty Whitman” of Third Avenue Value. This “became my guiding philosophy,” he said. The portfolio Roumell runs is dedicated to “finding value through out-of-favor, overlooked or misunderstood securities.”
One of the largest investments in the fund is Ultra Petroleum Corp. (UPL):
“We think Ultra has great assets. They are long-life assets. They have an average life of about 17 years. We’re bullish long-term on natural gas, but more importantly, with Ultra you don’t have to be that bullish on natural gas. Because they are such a low-cost producer, they don’t need dramatically high prices to succeed. The industry median all-in lifting cost is $6.31 per Mcfe, and Ultra’s is at $3.00. They anticipate that if gas prices go from $3.50 to $4.50 per Mcf, they can double Ultra’s EBITDA from $600 million to $1.2 billion. There is a lot of leverage in the model, it’s a very well run business,” Roumell said.
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Roumell Asset Management has added 395,000 shares in the first quarter of 2013 to its position in the company which now totals almost 526,970 shares and Mak Capital has also recently established a new position in Ultra of 1.65 million shares, the largest new institutional buyer. According to this SEC filing, Soros Fund Management also recently established a position with a purchase of 417,000 shares. Also according to the SEC filing, Soros Fund has 700,000 shares of Ultra reserved under a call option.
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