Billionaire Marc Lasry Liquidates Position In GM & Meritor; Initiates Stake In Oil Company

Avenue Capital’s Top-Three Equity Picks At The End Of 2016

#3 YRC Worldwide Inc (NASDAQ:YRCW)

– Shares Held By Avenue Capital (as of December 31): 3.19 Million

– Value of The Holding (as of December 31): $42.44 Million

Though Avenue Capital cut its stake in YRC Worldwide Inc (NASDAQ:YRCW) by one-third during the fourth quarter, the company still remained one of its top-three picks at the end of that period. Shares of the trucking company plunged in late-October after it reported disappointing third quarter numbers. However, the stock made a stellar recovery in the next two months and managed o end the fourth quarter up by 7.8%. Earlier this month, YRC Worldwide Inc (NASDAQ:YRCW) reported its fourth quarter numbers, declaring a per share loss of $0.23 on revenue of $1.15 billion versus analysts’ expectation of a per share loss of $0.12 on revenue of $1.13 billion. Following the results announcement, YRC’s stock nosedived by more than 12% and is now trading down 5.27% year-to-date. Investors tracked by us that were betting on YRC Worldwide inched up by one to 20 during the fourth quarter, but the aggregate value of their holdings in it came down by $5 million to $102.73 million during the same time.

#2 MIDSTATES PETROLEUM COMPANY, INC. (NYSEMKT:MPO)

– Shares Held By Avenue Capital (as of December 31): 3.49 Million

– Value of The Holding (as of December 31): $72.48 Million

MIDSTATES PETROLEUM COMPANY, INC. (NYSEMKT:MPO) was a new entrant in Avenue Capital’s portfolio during the fourth quarter. The independent exploration and production company was delisted by the NYSE in February last year after its stock fell below the continued listing standard of the exchange. In May,  MIDSTATES PETROLEUM COMPANY, INC. (NYSEMKT:MPO) filed for chapter 11 bankruptcy protection after reaching a preliminary agreement with its bondholders over the terms of a $2 billion debt-for-equity swap. It took the company more than five months to emerge out of bankruptcy, following which its stock was relisted on NYSEMKT. Since getting re-listed, MPO’s stock has mostly been range bound and is currently trading down by 2% for 2017. Including Avenue Capital, 16 hedge funds track by us initiated a stake in MPO during the fourth quarter and the aggregate value of their holdings in it amounted to $375.47 million, at the end of December.

#1 Dynegy Inc. (NYSE:DYN)

– Shares Held By Avenue Capital (as of December 31): 9.34 Million

– Value of The Holding (as of December 31): $79.02 Million

With Avenue Capital upping its stake in Dynegy Inc. (NYSE:DYN) by 19% during the fourth quarter, the company remained the fund’s top stock pick, in terms of value, at the end of that period. Dynegy Inc. (NYSE:DYN) became a part of Avenue’s portfolio during the fourth quarter of 2012, when its stock used to trade above $18. Since then, shares of the beleaguered utility company have lost more than half their value. A large part of the decline can be attributed to the massive debt load on the company, which ballooned in the last few years due to the several acquisitions that Dynegy made while chasing inorganic growth. A lot of analysts who cover Dyenergy currently think that its stock will continue to languish going forward. Earlier this month, analysts at Deutsche Bank AG downgraded the stock to ‘Sell’ from ‘Hold’ and also cut their price target on it to $6 from $8, which suggests a further downside of almost 30%. Though Dynergy gained some popularity among hedge funds covered by us during the fourth quarter with its ownership rising by six to 42, the aggregate value of their holdings in it fell  by 36% to $486.75 million during the same time owing largely to the heavy decline in the company’s stock .

Disclosure: None