In the following 30 to 45 days after the end of the first quarter of the year, institutional investors that exercise investment discretion of over $100 million in capital are required to reveal their long equity positions through 13F SEC filings. One of this investors, Michael Kao, the manager of Akanthos Capital has filed recently his first quarter 13F disclosing his holdings at the end of March 31st.
Taking a look at the most recent 13F filed by Michael Kao allows us to analyze the funds equity portfolio and some of the changes that have been made to the positions held by Akanthos Capital. The fund has increased the number of positions to 17 at the end of March, from 13 at the end of last year. Below you will find five largest holdings of Akanthos in terms of value. Highlights are: American International Group Inc (NYSE:AIG), Priceline.com Inc (NASDAQ:PCLN), and RadioShack Corporation (NYSE:RSH).
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AIG rules the equity portfolio
American International Group Inc (NYSE:AIG) is the holding with the largest value in Akanthos Capital’s 13F portfolio. Michael Kao’s fund helds 100,000 shares in American International Group Inc (NYSE:AIG), the value of the stake being about $3.88 million, the filing showed. However, if we compare the numbers with the previous 13F filing, we can notice that Akanthos dumped 150,400 shares and the value of the stake decreased from $8.84 million.
Trading at a meager 0.63 times book, American International Group Inc (NYSE:AIG) is one of the cheapest S&P 500-listed financial stocks, and a PEG ratio of 0.86 indicates that investors are also undervaluing its bottom line growth prospects. If we take a look back at the American International Group Inc (NYSE:AIG)’s performance in 2012, the company posted a net loss of $4.0 billion, compared to a net profit of $21.5 billion in the last quarter of 2011. Over the whole year of 2012, the company’s net income totaled $3.4 billion, against $20.6 billion in 2011.
The next position in Akanthos’ equity fund is Priceline.com Inc (NASDAQ:PCLN), where the fund holds 5,400 shares worth about $3.7 million. The online travel company, which offers hotel booking services, is a new position in the fund’s portfolio. The gross profit of Priceline.com Inc (NASDAQ:PCLN) increased by 29.7% on the year to $940 million, while full-year gross profit amounted to $4.1 billion, up by an annual 32.6%, according to a statement. The company will announce the financial results for its fiscal first quarter of 2013 on May 9th. The year-to-date return on Priceline.com Inc (NASDAQ:PCLN)’s stock is 13.95%.
Michael Kao’s fund also holds 724,888 shares in RadioShack Corporation (NYSE:RSH), the value of the stake being $2.4 million. The consumer electronic goods retailer posted a gross profit of $337 million for the first three months, against $370 million a year ago. The net loss of RadioShack Corporation (NYSE:RSH) amounted to $43 million, compared to $8 million from last year.
The fourth most valuable position in Akanthos Capital’s portfolio is SanDisk Corporation (NASDAQ:SNDK), where the fund owns 31,400 shares, the position being worth $1.7 million, according to the most recent 13F filing. In its last quarterly report, SanDisk Corporation (NASDAQ:SNDK) reported revenues of $1.34 billion, which represents a 11% increase on the year. Net income totalled $166.2 million at the end of March, which is higher compared to $114.4 million a year ago. Like Priceline, SanDisk Corporation (NASDAQ:SNDK) is a new position in the Akanthos Capital’s equity portfolio, and like AIG, it sports a sub-1.0 PEG.
An interesting investment in education
In Career Education Corp. (NASDAQ:CECO), the fund managed by Michael Kao holds 558,100 shares, the value of the stake being $1.3 million. The company, which represents another new holding for Akanthos, will announce its financial results for the first quarter on May 7th. At the end of last year, Career Education Corp. (NASDAQ:CECO) reported a total revenue of $354.7 million, but the company posted a net loss of $61.5 million, which, however, is lower than the net loss from a year earlier, worth $120.4 million. In full-year 2012, the revenue of Career Education Corp. (NASDAQ:CECO) fell to $1.49 billion, from $1.87 billion one year earlier, and the company had a net loss of $142.8 million, against a net income of $18.6 million in 2011.
Final Thoughts
Even though Akanthos Capital is a smaller sized fund and has a much more focused equity portfolio than other larger funds, due to the diversity of companies from different industries, the fund will be able to cope in case some of these stocks turn sour. At the same time, new positions in Career Education, SanDisk and Priceline each represent intriguing value opportunities moving forward, and retail investors with a similar penchant for value-centric strategies should take notice. Of these five holdings, it looks like American International Group Inc (NYSE:AIG) is the strongest bet, and the size of Kao’s position in the post-bailout insurer indicates that he’s got a ton of conviction as well.
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Disclosure: none
