Transocean stock ‘breaking out’ as sentiment shifts

The world’s largest offshore drilling contractor appears to be back in favor with investors.

Transocean (NYSE: RIG) has seen its stock price jump 90% in six months and hedge fund managers are now taking notice.

Chris MacIntosh, who runs Glenorchy Capital, says there is “meaning” in looking at the company’s long-term chart, as it appears to be “breaking out” of a two-year-old trading range.

“Like many oil service companies, you are able to buy Transocean at the same level it was trading at in the mid-1990s or even below listing prices,” MacIntosh said.

“We believe offshore oil and gas drilling remains one of the most out of favour sectors.”

Chris MacIntosh, Glenorchy Capital

But MacIntosh is one who believes sentiment towards stocks like Transocean will begin to turn, and there are signs that shift could be under way as people realize there is still strong demand for drilling.

Earlier this week, Transocean revealed the ultra-deepwater drillship, Dhirubhai Deepwater KG2, had been awarded a new $392 million contract for work offshore Brazil.

Even prior to Transocean’s recent price spike, MacIntosh had told his newsletter readers the company deserved attention as one of the “few drilling companies to avoid bankruptcy”.

“For what it is worth, drillers are outperforming the S&P 500 and the broader oil services sector (XES),” MacIntosh said.

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