Nexans SA (OTCMKTS:NXPRF) (EPA:NEX), a French cable company which provides services to several industries, is a unique small cap that seems to have grabbed the interest of several big name hedge funds, in both a good and bad way. Over the past five years, Nexans has lost almost 50% of its public value and is currently valued at 2.5 billion euros. The company may seem small when only its market cap is considered, but Nexans SA (OTCMKTS:NXPRF) (EPA:NEX) is actually the largest cable and wire maker globally. Nexans SA (OTCMKTS:NXPRF) (EPA:NEX) very recently got into an agreement to buy the cable arm of Madeco, a Chilean company, for $822 million.
Madeco is one of major shareholders of Nexans
Madeco is also a major shareholder of Nexans SA (OTCMKTS:NXPRF) (EPA:NEX) itself—the company owned 20.03% of Nexans according to the disclosure in May 2012. Nexans is looking to expand its hold in Latin America where Nexans has limited business. The French company is also looking to make acquisitions in Japan and China to increase exposure in Asia. Nexans’ buyout of Olex Cables has worked very well for the company, as the unit brought double revenues in the Asia-Pacific region. Olex Cables was bought at $549 million in Dec 2006.
Short and long positions in Nexans
Among the major U.S. based stakeholders, there is Franklin Resources, Inc. (NYSE:BEN), the asset manager scaled back its exposure in Nexans from 5.12% to 4.8% in December last year.
Third Avenue Management, founded by Martin Whitman, also has a large long position in Nexans, up to 5.17% of the company since it last reported in July 2012. Manning and Napier Inc (NYSE:MN) has a position in 5.18% of the company.
On the other hand, there are a number of shortsellers who have bet on Nexans’ decline. Citadel has a 1.09% short in the company, Saemor Capital has a 0.76% short, Oxford Asset Management 0.58% and AQR Capital has 1.1% short position. Previously AKO Capital and Highbridge Capital were also shortselling Nexans SA (OTCMKTS:NXPRF) (EPA:NEX), but they covered their positions to below 0.5% of the company.
Nexans SA (OTCMKTS:NXPRF) (EPA:NEX) reported revenue of 3.4 billion euros in first half of 2013, whereas net loss was -145 million and profit margins were down -4.2%. The company reported EPS of 2.21 euros in FY2012 and is expected to deliver 0.31 euros in this year, according to analyst estimates. Shares are up 30% YTD.