James Dondero’s Highland Capital recently increased its stake in Nexpoint Credit Strategies Fund (NYSE:NHF) by 2.87 million shares. Following this latest transaction, the investment firm’s holding amounts to 7.30 million common shares, representing 11.4% of the company’s outstanding stock. In addition to betting on Nexpoint, Highland Capital was particularly bullish regarding NRG Energy Inc (NYSE:NRG), Microsoft Corporation (NASDAQ:MSFT), and Anadarko Petroleum Corporation (NYSE:APC), disclosing a significant increase to its holdings in each of these equities last quarter.
Highland Capital is a hedge fund specializing in credit investments that was co-founded by James Dondero in 1993. Before launching the investment firm where he currently serves as President, Mr. Dondero worked as a credit investor. In addition to serving as CIO of Protective Life’s GIC subsidiary, he managed $1 billion for American Express during the 1980’s. Although Highland Capital’s focus is set on credit investments, the fund has allocated a portion of its assets under management to the public equity markets. According to its last 13F filing, the firm boasts a highly diversified equity portfolio with a market value of $2.99 billion as of the end of the fourth quarter, up from $2.67 billion in the previous quarter.
Nexpoint Credit Strategies Fund (NYSE:NHF) was already amongst Highland Capital’s top 10 picks at the end of the fourth quarter and the firm increased its holding by some 2.74 million shares during the quarter. Furthermore, Highland is currently the largest shareholder of NexPoint Credit Strategies Fund among institutional investors. In addition to gaining more than 2% year-to-date, Nexpoint Credit Strategies Fund (NYSE:NHF) recently has announced a regular monthly dividend on its common stock of $0.06 per share. Furthermore, William Michaelcheck’s Mariner Investment Group initiated a position in the company last quarter, with the purchase of 217,100 shares.
Last quarter Highland Capital was also bullish on NRG Energy Inc (NYSE:NRG), disclosing a holding of 3.62 million shares, up by 97% on the quarter. Although the stock fell by 5% in 2014 and 11% year-to-date, Mr. Dondero’s firm and several other funds remain optimistic. Amongst the funds we track, Israel Englander’s Millennium Management ranks as the company’s largest shareholder, boasting a stake of 6.17 million shares. Unlike Mr. Englander’s firm, which reduced its exposure to the stock by 21% last quarter, Clint Carlson’s Carlson Capital increased its position in NRG Energy Inc (NYSE:NRG) to 5.62 million shares. Although the energy company recently reported fourth quarter earnings of $0.21 per share, missing the consensus estimate average of $0.93 per share by a long shot, revenue and income are up in year-on-year terms. Hence, the company might not be living up to the highest standards, but it surely is taking steps in the right direction.
Microsoft Corporation (NASDAQ:MSFT) was not only one of Highland Capital’s top picks last quarter, but is also a stock that is favored by numerous financial institutions. In fact, the company ranked amongst the five most popular tech stocks among hedge funds last quarter. Mr. Dondero’s fund currently holds 2.05 million shares, following a 102% increase during the fourth quarter. In addition to gaining 24.5% in 2014, Highland Capital is bullish regarding Microsoft Corporation (NASDAQ:MSFT) for a number of reasons. Not only is the company set to continue performing well this year, but it backed by major institutional investors, such as Jeffrey Ubben’s ValueAct Capital, which owns 74.23 million shares of Microsoft, being one of the largest shareholders of the company.
Finally, Highland Capital was also bullish on Anadarko Petroleum Corporation (NYSE:APC) last quarter, increasing its exposure to the stock by 171% to 999,300 shares. Whereas the oil & gas exploration and production industry fell by 15% last year, Anadarko performed rather well, gaining almost 4% in 2014. Furthermore, analysts believe the company is set to increase its bottom line performance, thanks to investments made in high-margin oil assets. In addition to Highland Capital, billionaire hedge fund manager Paul Singer is also bullish on this stock. Mr. Singer’s Elliot Management increased its exposure to the stock by 24% last quarter to 4.62 million shares.
Disclosure: none.
