Pension Fund Raises Its Stake in Smith to 18.5%
A Maryland pension fund management firm increased its stake in Smith International to 18.5%, making it the single largest shareholder in the embattled oil tools company, The Times has learned.
In an unrelated development, Smith said Thursday that it plans massive layoffs at its Irvine-based Smith Tool division.
Documents filed Wednesday with the Securities and Exchange Commission, indicate that Torray Clark & Co. of Bethesda holds 4.22 million shares of stock in the Newport Beach-based company. With a price of $8.125 a share at the close of trading on the New York Stock Exchange Thursday, the firm’s stake in Smith is valued at $34.2 million.
Although it is not immediately clear when Torray Clark purchased additional stock to boost its share of Smith from the 11.6% it has held since late last year, the disclosure was made less than a week after Los Angeles-based Whittaker Corp. informed the SEC that it had liquidated all of its 8.3% stake in Smith.
Officials at Torray Clark declined to comment about the company’s increased holdings, but industry analysts say the firm has been buying large quantities of stock in troubled oil service companies.
“Torray Clark is accumulating enormous positions in all these distressed oil service companies, betting that within the next several years there will be a recovery,” said Jeff Freedman, an analyst with the brokerage house of Smith Barney, Harris Upham & Co. in New York. “They are betting that this industry will have a turnaround in the next 12 to 18 months and they will be spectacular performers.
Although the exact number of employees to be laid off today has not been disclosed, a company spokeswoman said the layoff likely will exceed 250 employees and will include both hourly and salaried personnel. Smith blamed weak demand for oil rig drill bits caused by the continuing petroleum industry slump, as the reason for the job reduction.
The layoffs are the latest of a series during 1985. In January, the company trimmed 700 people from the Smith Tool division, and it cut another 75 employees in March. In August, 38 people were laid off at Smith’s Dyna-Drill and Datadril divisions.
“The market conditions are delicate and we have to make an adjustment,” the spokeswoman said. Smith Tool, she added, is the company’s largest operation and is “most sensitive to fluctuations in oil rig construction.”
Rumors of further cutbacks at the Dyna-Drill and Datadril persist, although company officials have declined comment.
As previously reported, Smith lost $8.2 million during the third quarter ended Sept. 30, compared to net earnings of $3.6 million during the same period a year ago. For the first nine months of 1985, Smith posted losses of $58.3 million, compared with net earnings of $7.5 million in 1984.
