Fund Spy

Funds Place Bets on BP

Rachel Haig

Investors have been divided over  BP's (BP) prospects after the April 20 Deepwater Horizon accident in the Gulf of Mexico. Has the disaster put the company's future in jeopardy, or has market overreaction created a unique opportunity to buy the oil giant at a discount?

At the Morningstar Conference last month, the general tone tilted toward caution, and several managers noted that they could not satisfactorily determine the extent to which BP's stock slide was justified. Daniel O'Keefe of  Artisan International Value Investor  (ARTKX), for instance, said he looked at BP because of the dramatic value destruction but hadn't purchased it because he could not evaluate the extent of the losses from the spill. Another value-minded manager, Philippe Brugere-Trelat of  Mutual Global Discovery  (TEDIX), said he dipped a toe into BP because the stock fell so substantially but that he has kept it to a very small position because he remains concerned about future fines, penalties, and unknowns.

Rachel Haig does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.