Below we take a look at 5 Stocks Canyon Capital Advisors Can’t Live Without. For our methodology and a more comprehensive list of Canyon Capital’s highest conviction stock picks, please see 10 Stocks Canyon Capital Advisors Can’t Live Without.
5. Noble Corporation (NYSE:NE)
Value of Canyon Capital Advisors’ 13F Position: $125 million
Number of Hedge Fund Shareholders: 31
Canyon Capital Advisors was one of several hedge funds that took a new position in Noble Corporation (NYSE:NE) during the first quarter, buying 3.95 million shares of the offshore driller. There was a 29% jump in the number of hedge funds long NE during the quarter, with John Smith Clark’s Southpoint Capital Advisors and Crispin Odey’s Odey Asset Management among the other funds to build new stakes in the small-cap company.
Noble Corporation (NYSE:NE) is another offshore driller that Canyon Capital has taken a keen interest in. The company has been active since emerging from bankruptcy protection last year, first by acquiring Pacific Drilling, which had also just emerged from bankruptcy protection, and then later by merging with Maersk Drilling. The latter move received shareholder approval in May but is still pending approval from British authorities.
It’s been reported that the deal will likely be approved should the companies execute several proposed remedies, including the selling off several rigs. In late June, Noble Corporation (NYSE:NE) took a big step forward on that front by agreeing to sell five jackup rigs to Shelf Drilling for $375 million. BTIG upgraded Noble Corp. to ‘Buy’ from ‘Neutral’ in early June, with a $60 price target. The firm expects the merger to close in the near-term.
4. Tenet Healthcare Corporation (NYSE:THC)
Value of Canyon Capital Advisors’ 13F Position: $136 million
Number of Hedge Fund Shareholders: 57
Hedge funds are becoming ever more bullish on Tenet Healthcare Corporation (NYSE:THC), one of the 5 Biggest Hospital Companies in the World. There’s been a 39% jump in ownership of the stock among the smart money over the past three quarters, with each successive quarter hitting a new all-time high in ownership. Canyon Capital owns 1.58 million shares as of March 31, down by 6% quarter-over-quarter.
Tenet Healthcare Corporation (NYSE:THC)’s earnings are expected to rise by 17% in 2023, which would put the hospital and pharmacy company’s P/E ratio at just 7x forward earnings. Loop Capital expects the company to address that valuation discrepancy in the future and is bullish on the company’s growing ambulatory segment, which it believes could be generating half of Tenet’s adjusted EBITDA within two years.
On the other hand, Mizuho recently slashed its price target on Tenet Healthcare Corporation (NYSE:THC) to $63 from $103, though it did maintain a ‘Buy’ rating on THC shares. The firm noted that surveys of inpatient and outpatient trends show that volumes are still below pre-pandemic levels, while nurse wage pressure could weigh on the company’s bottom line in the future.
3. Shaw Communications Inc (NYSE:SJR)
Value of Canyon Capital Advisors’ 13F Position: $155 million
Number of Hedge Fund Shareholders: 23
Canyon Capital owns an even 5 million shares of Shaw Communications Inc (NYSE:SJR) as of March 31 after raising its position in the Canadian telecommunications company by 45% during Q1. Several other billionaire money managers were also loading up on Shaw during the quarter, including Jim Simons’ Renaissance Technologies and Israel Englander’s Millennium Management.
Shaw Communications Inc (NYSE:SJR)’s proposed merger with Rogers Communications was blocked by the Canadian antitrust watchdog in late June, though the two sides have since begun a mediation process that could yet see the merger salvaged. Earlier in the month, Rogers and Shaw agreed to sell Shaw’s mobile division, Freedom Mobile, to Quebecor for CAD2.85 billion in an effort to satisfy regulators.
Shaw Communications Inc (NYSE:SJR) suffered year-over-year revenue and earnings declines in its fiscal Q3, which was not unexpected given the challenges the company has faced in regards to chip shortages and legal fees. Revenue slumped to CAD1.35 billion from CAD1.38 billion a year earlier, while EPS cratered to CAD0.41 from CAD0.70.
2. Berry Global Group Inc (NYSE:BERY)
Value of Canyon Capital Advisors’ 13F Position: $164 million
Number of Hedge Fund Shareholders: 42
Canyon Capital appears to be quite bullish on the state of the packaging industry, as it has large stakes in both Ardagh Metal Packaging S.A. (NYSE:AMBP) and Berry Global Group Inc (NYSE:BERY). When it comes to the latter, Canyon Capital raised the size of its BERY holding by 16% to 2.84 million shares during Q1, with the plastic packaging manufacturer ranking as its second-largest 13F long position.
Berry Global Group Inc (NYSE:BERY) was targeted by activist hedge fund Ancora Advisors in late 2021, with the fund pushing the company to explore strategic alternatives, including a sale. Ancora believed that Berry Global could fetch as much as $100 per share in a sale, close to double what the company’s shares currently trade for. The fund also called Berry’s plan to repurchase $50 million of its shares an insult to its investors and urged to company to instead buy back $1 billion worth.
Canyon Capital itself has also pressured Berry Global Group Inc (NYSE:BERY) to consider various options in the past, including the sale of some of its non-core assets with an eye on cutting the company’s debt. Berry Global has aggressively grown through M&A in recent years, which has supercharged its growth rate above the industry’s average, but also ballooned its debt.
1. CBL & Associates Properties, Inc. (NYSE:CBL)
Value of Canyon Capital Advisors’ 13F Position: $276 million
Number of Hedge Fund Shareholders: 19
Topping the list of stocks that Canyon Capital can’t live without is CBL & Associates Properties, Inc. (NYSE:CBL). The fund has a sizable ownership stake in the shopping center REIT, owning nearly 8.4 million shares, or about 42% of its common stock. The fund’s former Partner and Senior Portfolio Manager Jonathan Heller currently serves as the company’s Chairman of the Board.
CBL & Associates Properties, Inc. (NYSE:CBL) has taken strong strides to improve its financial flexibility and cash flow generation following its emergence from chapter 11 bankruptcy in late 2021, so much so that the company recently announced a $0.25 per share quarterly dividend. CBL had a $335 million cash position as of March 31, up from $260 million in cash and cash equivalents on its balance sheet on November 1, 2021, and had reduced its debt by $200 million.
CBL & Associates Properties, Inc. (NYSE:CBL) grew same-center sales per square foot by 13% in the fourth quarter, while its portfolio occupancy rose to 89.3%, up by 90 basis point quarter-over-quarter. Outlet center occupancy was particularly strong during the quarter, rising to 93.6%, up from 89.1% a year earlier. CBL pulled in $349.8 million in adjusted FFO in 2021, compared to just $140.8 million in 2020.
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Disclosure: None.
