Problems in Greece are also affecting Greek companies that are listed on foreign stock markets. The GREK ETF, which reflects the equity market performance in Greece and is comprised of the 20 largest companies that are based in the country or earn the largest portions of their revenues there, is down by more than 50% over the last year. Investors are also protecting themselves against risks that arise in the debt-ridden country and are shedding their investments with a lot of exposure to Greece. In a recent filing with the Securities and Exchange Commission, Andrew Feldstein and Stephen Siderow‘s BlueMountain Capital Management disclosed halving its position in the Athens-based DryShips Inc. (NASDAQ:DRYS) to 36.10 million shares, from 70.22 million shares held previously. Following the decrease, the passive position represents 5.4% of the company’s outstanding common stock.
DryShips Inc. (NASDAQ:DRYS) is a $500 million company that operates a fleet of tankers and dry bulk carriers, with operations globally. Following the financial crisis of 2008/2009, the company’s operations have been severely damaged (along with the majority of companies from the industry). However, the company did better than some of its peers, which have had to file for bankruptcy and restructure their operations. Nevertheless, the stock is down by over 70% in the last 52 weeks. Last week, DryShips Inc. (NASDAQ:DRYS) announced entering a deal to sell its 10 tankers to George Economou, its CEO and largest shareholder, in a $536 million deal. Earlier the company planned to spin-off its tankers as a separate public company, but later withdraw the IPO application, citing unfavorable market conditions.
Even after selling a large portion of its stake, BlueMountain remains the largest shareholder of DryShips Inc. (NASDAQ:DRYS) among US-listed institutional investors. Noam Gottesman‘s GLG Partners is another shareholder, owning 1.79 million shares as of the end of 2014 (both GLG and BlueMountain initiated stakes during the fourth quarter of 2014).
With more than $5.0 billion in its equity portfolio, BlueMountain is engaged in the credit and equity derivatives markets, but its equity portfolio is spread across a variety of sectors, including Healthcare, Technology, Basic Materials and others. Overall, during the first three months of 2015, its over 100 long positions in companies with a market cap with over $1.0 billion had an average return of 6.11% according to our weighted average returns methodology, beating the S&P 500 ETF (SPY), which inched up by less than 1.0% during the same period. The fund’s top positions have had a mixed performance during the first quarter, although the fund made a bet on Allergan during the second quarter of 2014 which paid off pretty well, as the company was bought by Actavis. Overall, excluding Allergan, BlueMountain’s three largest positions are represented by Eastman Kodak Co. (NYSE:KODK), Actavis plc (NYSE:ACT), and Fidelity National Financial Inc (NYSE:FNF), which had an average return of 3.28% during the first quarter. This return was primarily affected by the 12.44% slump of Eastman Kodak’s stock, which offset the 15.62% gain of Actavis during the first three months of 2014. Let’s take a closer look at these stocks and the holdings that BlueMountain held in them according to its latest 13F filing.
Eastman Kodak Co. (NYSE:KODK) has been included in BlueMountain’s equity portfolio since the last quarter of 2013 and throughout the last year, the investor raised its stake in the company to 7.55 million shares from 1.21 million shares held earlier. However, the stock lost 37% during 2014, and the trend has continued since the beginning of the current year. Once a leading company in the imaging solutions business, Eastman Kodak Co. (NYSE:KODK) has been losing ground lately, with revenues for the last several years declining and net losses expanding.
With a market cap of around $800 million, Eastman Kodak Co. (NYSE:KODK) falls in the category of stocks that we follow more closely at Insider Monkey. Through empirical studies, we determined that a portfolio consisting of the 15 most popular small-cap stocks among hedge funds can outperform the market by a large margin. After a series of successful back tests that involved the equity portfolios of several hundred hedge funds between 1999 and 2012 (read more details about our analysis), we launched our small-cap strategy in August 2012 and since then it has returned 132%, outperforming the S&P 500 ETF (SPY) by nearly 80 percentage points. However, due to the deep underperformance of the stock, Eastman Kodak Co. (NYSE:KODK) is not very popular among the funds that we track, although several billionaires, including George Soros, Ken Griffin, and Jim Simons hold minor positions in the company as of the end of 2014.
Let’s move on to the other two largest long positions from BlueMountain’s equity portfolio, which are represented by Actavis plc (NYSE:ACT) and Fidelity National Financial Inc (NYSE:FNF). In Actavis, the investor held 523,400 shares, down by 51% on the quarter, but the stake will be increased in the next 13F filing barring other moves, as the deal with Allergan was completed and the fund received some shares of Actavis through the transaction. The investment in Actavis plc (NYSE:ACT) paid off well as outlined by the stock’s return and the same solid growth is expected to continue in the future, which is confirmed by the bullish sentiment of other funds that we track. Overall, Actavis plc (NYSE:ACT) ranked as the third most popular stock pick, with 131 funds disclosing ownership of nearly $14 billion worth of the company’s stock, including 18 billionaires among which are Dan Loeb, Andreas Halvorsen, Larry Robbins, and others.
In Fidelity National Financial Inc (NYSE:FNF), the fund managed by Messrs. Feldstein and Siderow reported holding 2.59 million shares with an aggregate value of $89.33 million, up by 13% on the quarter. In comparison with Actavis, Fidelity National Financial posted a more modest return, appreciating by 7.27% during the January-March period. Moreover, Fidelity National Financial might be well-positioned for long-term growth, which is supported by the consensus ‘Buy’ rating provided by analysts. The $10 billion insurance company was also included in the equity portfolios of 45 other funds, including activist Keith Meister’s Corvex Capital, which owns 20.24 million shares, the position in Fidelity National Financial Inc (NYSE:FNF) being one of the largest in its equity portfolio.
Disclosure: None
