Stephen Feinberg’s Cerberus Capital Management disclosed ownership of 12.0 million shares of Blue Bird Corp (NASDAQ:BLBD), in a filing with the SEC on Thursday, the date of event which required the filing being on February 24. The position represents a 60.8% stake in Blue Bird Corp, which was acquired by and merged with Hennessy Capital Acquisition Corp on February 24, with the newly-merged company retaining the former’s name.
Cerberus Capital Management, which was founded in 1992 and is managed by Feinberg, makes many of its investments in the private sector, as its investment in Blue Bird was. Hennessy purchased the school bus manufacturer for $427 million from The Traxis Group B.V, which is majority owned by funds affiliated with Cerberus. Cerberus does also have a small public equity portfolio, with the majority of its $1.10 billion portfolio invested in just one company (we’ll get to its top picks later in the article).
In addition to retaining a large stake in Blue Bird, Cerberus will also maintain a presence on the company’s Board of Directors, as Cerberus Operations’ CEO Chan Galbato will continue on as the non-executive Chairman of the Board, a position he held with Blue Bird since 2009. Traxis also entered into a letter agreements with both Hennessy and Coliseum Capital Management, stating that it will make no effort to directly or indirectly push for the removal of Daniel J. Hennessy or Adam Gray from the company’s board at any point before the company’s 2017 and 2016 shareholder meetings, respectively. Hennessy will function in the capacity of Vice Chairman of the new company.
In addition to being an industry leader in school bus production and innovation, Blue Bird is also a leader in building alternative fuel school buses that can run on propane or compressed natural gas. The position in Blue Bird, valued at $109.08 million, makes it Cerberus Capital’s second-most valuable public equity position based on its holdings at the end of 2014.
Of those positions at the end of 2014, little has changed at the top. In fact the top three positions remained unchanged from the last time we profiled Cerberus Capital’s portfolio, two quarters ago. Ally Financial Inc (NYSE:ALLY) remained by far the most lucrative holding of Cerberus, consisting of the same 41.52 million shares that it held since it was opened in that second quarter. The value of those shares decreased during those six months however, from $992.66 million to $980.62 million. As with Blue Bird, Cerberus was a private owner of Ally Financial before the company went public in April 2014, having purchased a 51% stake in the company in 2006. The stake in Ally totaled 89.49% of the company’s public equity portfolio at the end of the year.
Cerberus Capital’s second most valuable position was in BlueLinx Holdings Inc. (NYSE:BXC), with the fund possessing 47.14 million shares worth $54.68 million at the end of 2014. As with Ally, the value of those shares has decreased slightly over the past six months, as shares of BlueLink have slipped 21.09%, dragging it down to all-time low levels at just $1.13. BlueLinx Holdingds operates primarily through its wholly-owned subsidiary company BlueLinx Corporation, which operates in the home building supplies sector, dealing in both structural and specialty products.
Lastly is DHT Holdings Inc (NYSE:DHT), which has remained the third-most valuable position in Cerberus’ public equity portfolio with 6.80 million shares valued at $49.68 million. That was down 11% from the end of the third quarter after two consecutive quarters in which Cerberus was quite bullish on the stock, increasing its position by 75% and 94% during the second and third quarters respectively. DHT Holdings had a very strong finish to 2014 and early into 2015 before a swoon. The crude oil tanker company weathered the oil price crisis fairly well, considering the extreme difficulty other companies in the sector have faced, and in fact has been producing strong growth in revenues and earnings over the past year. Cerberus was the second largest investor in DHT out of our tracked funds, after Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, which held 8.98 million shares at the end of 2014.
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