Oaktree Capital Management, the fund ran by billionaire investor Howard Marks, recently filed its 13F for the second quarter, disclosing its long equity stakes as of June 30. As per the document, the firm held an equity portfolio valued at more than $5.55 billion at the time, with a slight focus on information technology (21% of the total value), consumer discretionary (18%), and financial stocks (16%). In this article we will take a look into five bullish moves from this hedge fund manager, which has a penchant for distressed-debt, high-yield bonds and value investing.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).
Vale SA (ADR) (NYSE:VALE)
– Number of shares owned by Oaktree (as of June 30): 10.19 Million
– Value of Oaktree’s holdings (as of June 30): $32.87 Million
Let’s start with Brazil’s Vale SA (ADR) (NYSE:VALE), which saw Oaktree boost its exposure by roughly 8% during the second quarter, to 10.19 million shares. The largest shareholder among the 24 funds in our database long the stock was Jim Simons’ Renaissance Technologies, with 18.33 million shares worth $89 million at the end of June. Shares of Vale SA (ADR) (NYSE:VALE) have gained more than 65% year-to-date, including 12% since the beginning of the third quarter. In fact, the stock tumbled by roughly 13.75% over the past month. Recently, the Brazilian government has granted the company a 10-year license to operate a branch line that connects its S11D iron ore mine project and the Carajas Railway. S11D is expected to contribute about 90 million metric tons of iron ore per year.
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Cemex SAB de CV (ADR) (NYSE:CX)
– Number of shares owned by Oaktree (as of June 30): 6.77 Million Shares + 96.26 Million Bonds
– Value of Oaktree’s holdings (as of June 30): $139.21 Million
Next up is Cemex SAB de CV (ADR) (NYSE:CX), which saw its Series A Sponsored ADRs gain more than 37% over the first half of 2016. Over the second quarter, Oaktree augmented its stake in Series A Stock by 4%, while trimming its exposure to company bonds by the same percentage. Also long the stock of the Mexican company were Ken Griffin’s Citadel Advisors, with approximately $104.36 million in shares and bonds, and Ken Fisher’s Fisher Asset Management, with 7.18 million shares, valued at $47 million as of June 30. Cemex SAB de CV (ADR) (NYSE:CX) has had a great third quarter, having experienced a 30% surge in value. Most recently, the stock spiked after one of its US subsidiaries inked an agreement to sell certain cement assets to Eagle Materials for roughly $400 million.
