Capital Group Slashes Pacific Rubiales Stake as Shares Tumble

Jan 23, 2014 8:07 am ET

Jan. 23 (Bloomberg) -- Capital Group Cos., the $1.3 trillion investment firm, cut its holdings of Pacific Rubiales Energy Corp. by 27 percent as the crude producer struggles to replace output before its main license expires.

Capital Group sold 10.3 million shares in Colombia’s largest independent oil company in the fourth quarter, reducing holdings to 28.4 million, or 8.75 percent of the total, according to filings compiled by Bloomberg. The Los Angeles- based firm, which a year earlier ranked first among shareholders with a 15 percent stake, is now the second-biggest, behind Lazard Ltd.

Pacific Rubiales’s shares have dropped 21 percent in Toronto in the past three months on concern it may not replace output fast enough to sustain sales growth before the permit for its namesake Rubiales field expires in mid-2016. The Bogota- based company is seeking to add new prospects and buy smaller companies to diversify from the field that accounts for about 65 percent of its production.

Even after the recent decline, Pacific Rubiales has handed investors a 213 percent return since its Toronto listing in Feb. 6, 2008.

Pacific Rubiales spokesman Roberto Puente referred questions on the stake cut to Capital Group, whose Chuck Freadhoff declined to comment.

In September, James Rothenberg, chairman of Capital Group’s Capital Research & Management, defended the firm’s active stock picking in contrast with competitors’ index-based strategies in an interview.

Active funds such as Capital Group’s employ managers who select individual securities they believe will beat a given benchmark.

--Editors: Carlos Caminada, Tina Davis