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T2 Partners sees value in BP shares-Barron's

Date: Monday, June 21, 2010
Author: Reuters

Hedge fund T2 Partners said it likes shares of BP Plc (BP.L) despite the Gulf of Mexico oil spill that has tainted the British company and its stock, according to a Barron's article published on Sunday.

In a column titled "Other Voices," T2's managing partners said their reasons for recently taking a new position in BP are that it is "extraordinarily cheap" and that BP is "highly likely" to be able to cover clean-up, damages, fines and lawsuits relating to the disaster.

T2 Managing Partners Whitney Tilson and Glenn Tongue likened BP's situation with the Vioxx crisis of 2004, when Merck & Co Inc (MRK.N) withdrew the medicine on increased risk of heart attacks, but subsequently settled nearly all the claims against it and saw its stock rally.

"The near-term fundamentals are terrible, nobody knows when they will improve and fear-mongers dominate the headlines," Tilson and Tongue said in Barron's. "But for investors with courage, conviction and an outlook longer than a few months, we think this market overreaction is a wonderful buying opportunity."

BP shares have lost nearly half their value since the April 20 blast and fire on the Deepwater Horizon rig that killed 11 people and triggered the oil spill that has become one of the worst environmental disasters in U.S. history.