Hong Kong Firm Increases Smith International Stake

A Hong Kong-based firm that has been purchasing shares of troubled Smith International Inc. for several months has increased its stake in the Newport Beach-based oil tool company to 14.2% from 11.2% by buying 293,300 additional Smith shares for $1.4 million.

Industrial Equity (Pacific) Ltd., which has been buying Smith common stock since October, made its most recent purchases between Dec. 23 and Dec. 31, paying between $4.55 and $4.97 a share. By contrast, Industrial Equity bought its first stock in Smith for as little as $2.55 a share.

Oil industry observers seem to accept Industrial Equity’s word that it is buying Smith stock purely as a long-term investment and has no intention of attempting a takeover of the company, which currently is in a Chapter 11 bankruptcy reorganization.

Sam Z. Albright, an oil service analyst with Kidder, Peabody, noted that Industrial Equity, the international investment arm of the Australian and New Zealand investment corporations Brierley Investments Ltd. and Industrial Equity Ltd., wields a great deal of potential “investment clout.”

Albright said he believes that Industrial Equity in large part is betting that Smith soon will reach a settlement to reduce a $205-million judgment won by Hughes Tool Co. in a patent-infringement case against Smith. The huge judgment last year forced Smith into bankruptcy court. In all, Industrial Equity has spent $10.7 million to acquire its Smith stock.