Back when crude was near $50 a barrel and Athabasca's stock had fallen into penny territory, Ninepoint stepped in as others stepped back. The market was anxious about Athabasca's ability to refinance, with a major Norwegian shareholder looking to exit. Ninepoint bought a 53 million-share block in January 2021 from Equinor ASA at 18 Canadian cents apiece, taking a sizable swing on an overleveraged producer at a fragile moment.
That swing looks inspired now. Cenovus agreed to acquire Athabasca at C$12 per share using a mix of cash and stock, a gain of more than 6,500% versus Ninepoint's cost. The Toronto-based fund manager still holds around 13 million Athabasca shares and also owns Cenovus. Senior portfolio manager Eric Nuttall called the outcome "one of the highlights of my career," adding, "I'm equally happy because I think Athabasca is getting fair to full value for the company in who they are in terms of resource base, their ability to capitalize, booked reserves, all of these things." He continued, "But then you take Cenovus, which has the financial and technical capabilities to accelerate the pace of development and most likely do it probably even better." His take: "So it truly is one of these win-wins." He anticipates the merged entity will account for roughly 18% of his fund.
Ninepoint made its initial purchase as the Norwegian company was exiting the Canadian oil sands. Over the five-year span ending Aug. 31, the Energy Fund's returns exceeded 33% per year.
Occasionally a tiny position turns into the whole return of a fund. Market Briefs covers the stories behind the numbers free every weekday.
Oil stocks have been on a tear this year, helped by elevated crude prices tied in part to the Middle East war and by friendlier policy at both the federal and provincial levels in Canada. Year to date, the S&P/TSX Energy index is up more than 27%, the best-performing group in the country. Through Friday's close, Cenovus had climbed 99% and Athabasca had gained 51%.
Policy tailwinds matter too: On Thursday, Prime Minister Mark Carney described an additional Canadian oil pipeline as being of "national interest," speeding up the regulatory signoff. "I haven't been this encouraged for many, many years in terms of how positive the investment environment is for Canadian energy," Nuttall said.
This is what an asymmetric payoff looks like: a contrarian buy when refinancing looked dicey, a motivated seller, and a buyer with the balance sheet and know-how to speed up development. Most days are less dramatic, but moments like this are why investors watch cash flow, debt loads, and who is on the other side of the trade.
Outcomes like this are rare, which is exactly why they are worth studying. Join Market Briefs free and read the rest.
