Steven Tananbaum’s GoldenTree Asset Management increased its stake in Eagle Bulk Shipping Inc (NASDAQ:EGLE) last week by 2.29 million shares. According to a 13G form filed with the U.S. Securities and Exchange Commission, the investment firm now holds a stake of approximately 4.9 million common shares, representing 13.1% of the company’s outstanding stock. The financial institution acquired this large amount of shares only a few months after starting a new position in Eagle Bulk Shipping. This initial transaction took place at the end of October last year, when Mr. Tananbaum’s firm purchased 2.66 million shares of common stock.
GoldenTree Asset Management was founded by Steven Tananbaum in 2000 and is currently headquartered in New York City. Although it boasts an important equity portfolio, which has a market value of around $874 million, the investment firm is also highly active in the credit markets. When it comes to stocks, GoldenTree favors a bottom-up method, employing fundamental value analysis, and pursuing stocks with high margins of safety. Furthermore, the firm’s equity portfolio shows a clear preference for stocks of companies operating in the finance sector, with around 64% of holdings stemming from that industry. However, apart from its ETF holdings, the financial institution’s equity portfolio is actually quite balanced. According to its latest 13F filing, GoldenTree Asset Management’s top 3 picks for 2014 were Delta Air Lines Inc (NYSE:DAL), FairPoint Communications Inc (NASDAQ:FRP), and CDW Corp (NASDAQ:CDW), none of which are active in the financial sector. However, despite constituting the firm’s largest holdings as of the end of third quarter, it is worth mentioning that these three positions combined represented less than 10% of GoldenTree’s equity portfolio.
Only a few weeks ago, Mr. Tananbaum’s firm disclosed it had initiated a new position in Eagle Bulk Shipping Inc (NASDAQ:EGLE), amounting to 2.68 million shares. However, the actual purchase of stock took place in late October, as indicated in the corresponding 13G form. Following the latest increase in its stake, GoldenTree Asset Management is now one of the company’s largest institutional investors. Around the same time as Mr. Tananbaum’s firm acquired its newest equity, Howard Marks’ Oaktree Capital Management also revealed it had initiated a new position in Eagle Bulk Shipping. Following Oaktree’s latest purchase of stock, the hedge fund owns approximately 15.7 million shares, representing 41.3% of the company’s outstanding stock. The stake held by Mr. Marks’ firm is of activist nature. Another institutional investor who has taken a bullish stance towards the stock is Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors, with a position of around 4.7 million shares.
In August of 2014, Eagle Bulk Shipping Inc (NASDAQ:EGLE) filed for bankruptcy, after it failed to meet an interest payment in June. Thanks to a restructuring plan, which was agreed upon with the lenders, the company was able to secure a new credit facility of around $275 million. The refinancing program finally enabled Eagle Bulk Shipping to solve the issues that had arisen from the shipping industry’s excess capacity. When the company announced it had completed the restructuring plan in October, share prices rose considerably.
Eagle Bulk Shipping’s positive announcement was welcomed by investors like GoldenTree Asset Management, which immediately entered a large position in the equity. Much like Oaktree Capital, Mr. Tananbaum’s firm has extensive experience in the credit markets and might have seen the company’s recovering situation as a good opportunity to invest. Although the investment might pay off in the long-run, the stock’s development over the past few months has not been great. From mid-October to the beginning of February, share prices plummeted, losing around 39% of their value.
Despite the fact that share prices have dropped considerably over the past few months, the optimism displayed by Eagle Bulk Shipping Inc (NASDAQ:EGLE)’s institutional investors seems justified. After all, the company managed to recover from its complicated financial situation rather quickly. Furthermore, the backing of major investment firms is a clear signal that the shipping company still holds intrinsic value and could continue to grow.
Disclosure: none.
