Kyle Bass Buys Seahawk Drilling (HAWK) ~ market folly

Friday, February 25, 2011

Kyle Bass Buys Seahawk Drilling (HAWK)

Kyle Bass' hedge fund firm Hayman Capital has disclosed an 8.4% ownership stake in Seahawk Drilling (HAWK) with 1,000,000 shares. Hayman filed this information via a 13G with the SEC per portfolio activity on February 15th, 2011. This is a new equity position as they did not own equity as of December 31st, 2010.

We've covered Bass on the site before, but if you're unfamiliar with him, he has gained notoriety over the years due to his prediction of not one, but two 'bubbles.' First, he predicted and profited from the subprime crisis. Second, he was one of the first to call for sovereign defaults and that thesis has gained steam over the past year. For our prior coverage on this hedge fund manager, check out Bass' presentation at the Value Investing Congress.

His position in HAWK is intriguing because the company just agreed to an asset purchase with Hercules Offshore (HERO). HERO is buying 20 jackup rigs and related assets from HAWK for $25 million and 22.3 million shares of HERO. This cash infusion will be used to pay HAWK's debtor-in-possession (DIP) loan which the company secured in connection with its bankruptcy. You can head to the Special Situations Monitor for an analytical look at the situation here.

Also, Hercules Offshore is up big today after receiving an upgrade from Credit Suisse. They highlight that HERO is just around the corner from covenant relief.

Per Google Finance, Seahawk Drilling "operates a jackup rig business that provides contract drilling services to the oil and natural gas exploration and production industry in the Gulf of Mexico."

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