Jeff Buick‘s Trishield Capital Management recently submitted its 13F filing with the U.S. Securities and Exchange Commission for the quarterly period ended March 31. The filing indicated that the fund had $112.71 million worth of holdings in its public equity portfolio value, an uptick of $36.98 million from the previous filing period. The Manhattan, New York-based hedge fund had $207 million in assets under management. Trishield Capital Management mainly focuses on distressed, special, and event-driven investment opportunities. Based on the hedge fund’s investment strategy, Insider Monkey has been keenly following its activities and in this article we’ll unveil the fund’s top three small-cap picks heading into the second quarter. The three companies in question are Oasis Petroleum Inc. (NYSE:OAS), BlackBerry Ltd (NASDAQ:BBRY), and Rosetta Resources Inc. (NASDAQ:ROSE).
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Before looking into these three stocks, it’s important to shed a little light on why more investors are including small-cap picks in their investment portfolios and why we are encouraging investors to do so, when done properly. According to our research into the performance of the 15 most popular small-cap picks of hedge funds between 1999 and 2012, it became apparent that these stocks outdo the S&P 500 Total Return Index, having done so by one percentage point per month on average over the course of that period. We launched our flagship small-cap strategy in August 2012 based on this compelling research and it has not disappointed us or its investors since, returning over 142% since then and blasting the market by more than 84 percentage points (more details here).
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As of the most recent 13F reporting period, Trishield Capital Management holds a total of 553,586 shares of Oasis Petroleum Inc. (NYSE:OAS), with a market value of $7.87 million. The dynamics in the energy sector have seen the stock generate widespread interest, including from Trishield, for whom the stock was a new pick. Wall Street analysts have given the stock a consensus rating of 2.21, meaning the stock ranks as a solid “Buy” candidate. The company posted $0.28 in earnings per share in its most recent earnings report, beating estimates by $0.01. However, the company recorded revenue of $180.40 million, well short of analysts’ expectations of $262.10 million. Compared to the corresponding quarter last year, the revenue represented a steep decline of 44%. TheStreet Ratings recently gave the stock a “hold” rating, citing a number of factors, some of which show strengths while others show weaknesses. Strengths include expanding profit margins and healthy valuation status while the negative traits are worsening net income, weaker cash flow, and poor return-on-equity. During the quarter, a number of hedge funds had interest in the stock, including John Scully‘s SPO Advisory Corp, which held a total of 20.37 million shares of the firm, having upped its position from 7.73 million. A few others are billionaire John Paulson’s Paulson & Co, D E Shaw, and David Costen Haley’s HBK Investments. During the quarter, a total of 32 hedge funds out of the 730 we monitor had investments in the stock.
Trishield held a total of 740,030 shares of BlackBerry Ltd (NASDAQ:BBRY), with a market value of $6.61 million, a big increase from the previous quarter when it held a total of 139,700 shares. BlackBerry remains one of the most talked-about stocks in the world given its history as a dominant player in smartphones, even as the company itself has shrunk below small-cap levels at points throughout the last year and lost virtually all of its market share. It seems the Canadian company can’t really catch any momentum, as reports recently came out that big banks, including JPMorgan Chase Bank, are moving away from the use of BlackBerry devices. BlackBerry Ltd (NASDAQ:BBRY) has been widely castigated for its focus on making devices and less effort on creating apps to go along with them, something that has seen many of its customers switch to other devices. However, the company has reenergized its focus on creating secure apps for its customers to provide better services to its target market, which is mainly the corporate world. In terms of the company’s performance, it reported earnings per share of $0.04, which beat analysts’ consensus estimate by $0.07. For the current financial year, analysts forecast that the stock will post an earnings per share loss of $0.07. A total of 27 out of the 730 hedge funds we monitor were invested in the stock, having an aggregate of $623.99 million invested. Among them are Prem Watsa’s Fairfax Financial, and Jim Simons‘ Renaissance Technologies.
At the end of the quarter, Trishield held a total of 123,624 shares of Rosetta Resources Inc. (NASDAQ:ROSE), which had a market value of $2.10 million and was also a new purchase of the fund. The company recently entered into a merger agreement with Noble Energy in a $2.1 billion deal, a move that many analysts believe will breathe new life into the stock. The acquisition was inspired by the fact that Rosetta Resources Inc. (NASDAQ:ROSE) holds key production areas, the Eagle Ford and the Permian Basin, that are both resource-rich and cost-friendly. While the company’s production for the first quarter of 2015 went down, it was basically a strategic move to keep value for the future. During the first quarter, the company reported a loss of $0.13 in earnings per share. However, many investors are looking into the long-term prospects of the stock, with analysts predicting a consensus 5-year earnings per share growth rate of 10%. A total of 27 out of the 730 hedge funds that we monitor were invested in the stock, with four of them being hedge funds helmed by billionaires. The funds had an aggregate of $232.63 million invested in the stock at the end of the first quarter. Some of these hedge funds are First Pacific Advisors LLC, Renaissance Technologies, and Ric Dillon‘s Diamond Hill Capital.
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