Baker Hughes Sells More of its C3.ai Stake After Massive Rally

(Bloomberg) -- Baker Hughes Co. cut its stake in software maker C3.ai at a time short sellers alleged there was a deteriorating relationship between the companies.

Baker Hughes, one of the world’s biggest oil field contractors and C3.ai’s most important customer, sold more than 2.2 million shares, or about one-third its stake, in the second quarter, according to a security filing released Friday. This followed another major stock sale in the first three months of the year, leaving Baker Hughes as the fourth-largest shareholder with a 4.15% stake in C3.ai as of June 30, according to data compiled by Bloomberg.

The energy company was C3.ai’s largest shareholder in the fall of 2021 through a reseller agreement inked in 2019. Baker Hughes Chief Executive Officer Lorenzo Simonelli left C3.ai’s board in December 2021.

C3.ai’s stock has more than tripled this year as investors developed an insatiable appetite for the emerging technology of artificial intelligence, making it one of the best-performing stocks in the S&P North American Expanded Technology Software Index. Still, activist investors have accused the company of exaggerating the performance of its technology and employing poor accounting practices.

The Baker Hughes agreement has been a particular point of focus for short sellers. Kerrisdale Capital in a March letter pointed to multiple changes in C3.ai’s partnership as a sign of a fraying relationship. C3.ai said in a June filing that almost 35% of its fiscal-year revenue came from its partnership with Baker Hughes.

“The divestments could signal Baker Hughes taking a deeper look into its current partnership and potentially exploring tie-ups with other technology companies,” said Bloomberg Intelligence analyst Sunil Rajgopal. It could also be Baker Hughes just trying to realize some gains on C3.ai’s massive rally this year, he added.

Baker Hughes and C3.ai declined to comment. 

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