In a newly-amended filing with the SEC, West Face Capital, led by Greg Boland disclosed holding 24.30 million shares of Gran Tierra Energy Inc. (NYSEMKT:GTE), representing 8.77% of the company’s common stock. The current stake represents a significant decrease from the 27.0 million shares the fund held previously in the $812.23-million market cap company focused on oil exploration and production in South America.
We track the latest moves of hedge funds as well as monitor their holdings to find actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of 6 basis points between 1999 and 2012, however this 50-stock portfolio also underperformed the market by seven basis points per month. On the other hand, the top 15 small-cap stocks had an average monthly return of 127 basis points per month during the three month holding period that begins two months after the end of each quarter. We have been sharing the stock picks of our small-cap hedge fund strategy since the end of August 2012 and it has returned 144.4% since that time, outperforming the S&P 500 by nearly 85 percentage points (read the details here).
Last year, West Face Capital, a Toronto, Canada-based hedge fund launched the $600-million West Face Alternative Credit Fund Group, which invests primarily in privately-negotiated credits. Its mandate includes investing in second-lien debt, unsecured debt, mezzanine financing, acquisition financing, and bridge loans. In its latest 13F, West Face Capital disclosed its public equity portfolio, which was valued at $312.9 million. The fund has a very concentrated portfolio, mainly consisting of services stocks. In addition to the latest move, we’ll also take a look at West Face Capital’s top stocks, including PHI Inc. (NASDAQ:PHIIK), SunOpta Inc. (USA)(NASDAQ:STKL), SunCoke Energy Inc (NYSE:SXC).
Follow Gregory Boland's West Face Capital
We’ll start with Gran Tierra Energy Inc. (NYSEMKT:GTE), in which West Face Capital had a very strong stance during the last few months, proposing changes to the company’s board of directors. Last month, West Face Capital and Gran Tierra Energy Inc. (NYSEMKT:GTE) entered into an agreement, under which Gran Tierra agreed that its board of directors will be expanded to eight directors from six, and that West Face Capital’s nominees would fill the two vacant positions and two newly created ones. At the same time, West Face Capital agreed to vote all of its Gran Tierra common shares in favor of each of the company’s director nominees at the 2015 annual meeting, to be held on June 24, 2015. Investors like West Face Capital are worried about the performance of Gran Tierra Energy Inc. (NYSEMKT:GTE)’s stock, which has dropped by nearly 60% during the past calendar year. Another investor betting big on the company is Jim Simons’ Renaissance Technologies, which holds 5.48 million shares of the company as of March 31.
Let’s take a look at West Face Capital’s top holdings in terms of value now, starting with PHI Inc. (NASDAQ:PHIIK), in which the fund trimmed its stake by 2% to 4.99 million shares during the first quarter, with the stake valued at $150.1 million. PHI Inc. (NASDAQ:PHIIK) is a $557.7-million market cap provider of helicopter transportation services to the offshore oil and gas, onshore mining, international, air medical, and technical services industries. For the three months ended March 31, PHI Inc. (NASDAQ:PHIIK) reported operating revenues of $204.2 million, up from $197.1 million in the same period last year, while posting net earnings of $10.4 million compared to a net loss of $5.3 million in the same quarter one year ago. During the last three months, the company’s stock has increased by 19.45%. Among the investors we track at Insider Monkey is Michael Doheny’s Freshford Capital Management, which holds 222,718 shares of the company as of March 31.
The second ranked holding of the Canadian fund is represented by SunOpta Inc. (USA)(NASDAQ:STKL), in which West Face Capital’s stake contains 4.37 million shares worth $46.5 million. The stake remained unchanged over the course of the first quarter. With a market cap of $706 million, SunOpta Inc. (USA)(NASDAQ:STKL) is a global company focused on natural, organic and specialty foods. For the first quarter of 2015, the company posted earnings of $5.2 million, or $0.08 per diluted common share, versus earnings of $6.6 million, or $0.10 per diluted common share in the same quarter last year, while its revenues decreased by 5.9% to $303.4 million. On the insider trading front, director Jeremy Kendall recently unloaded 50,000 SunOpta shares at an average price of $12.72. Following the sale, Kendall still owns 424,164 shares of the company. Another investor that sees value in SunOpta Inc. (USA)(NASDAQ:STKL) is Mariko Gordon’s Daruma Asset Management, which holds 5.03 million shares as of March 31.
Lastly is SunCoke Energy Inc (NYSE:SXC), in which West Face Capital reduced its stake by 5% to 2.59 million shares worth $38.6 million. SunCoke Energy Inc (NYSE:SXC) is an independent producer of coke in the Americas, with a marker cap of 983.12 million. In the first quarter of 2015, SunCoke Energy Inc (NYSE:SXC) posted a loss from continuing operations of $2.0 million, or $0.03 per share, versus a loss of $1.8 million, or $0.02 per share, in the same period last year. One of the notable recent moves of the company was the increase of its quarterly cash dividend by 28%. The company declared a dividend of $0.075 per share of common stock, to be paid June 10 to stockholders of record at the close of business on May 5. The increased dividend provides a yield of 1.26%, helped by SunCoke Energy Inc (NYSE:SXC)’s stock, which has not been performing well, declining by 22.12% year-to-date. In a letter to the board of directors of SunCoke Energy Inc (NYSE:SXC), Matthew Mark’s Jet Capital Investors criticized the company’s management for not taking any meaningful action in recent months to create shareholder value. In its 13F filing, Jet Capital disclosed owning 4.12 million SunCoke Energy Inc (NYSE:SXC) shares as of March 31.
Disclosure: None
