Perry Capital’s Top Bets As It Keeps Losing Money

#3 American International Group Inc (NYSE:AIG)

– Shares Owned by Perry Capital (as of June 30): 3.7 million

– Value of Holding (as of June 30): $195.7 million

Moving on, American International Group Inc (NYSE:AIG) was another stock in which Perry Capital reduced its stake during the second quarter, by 30%. The insurance giant lost a considerable amount of its market capitalization during the first-half of 2016, however its stock has recouped some of those losses in the current quarter and now trades down by 5.63% year-to-date. American International Group Inc (NYSE:AIG) was cornered by revered activist investors like Carl Icahn last year, who attempted to persuade it to break its businesses into three separate companies. Though AIG didn’t yield to that demand, it agreed to cut down its operating expenses and launched a massive $25 billion share repurchase program to keep the activists at bay. In order to raise money for that share repurchase program, the company agreed to sell its stake in United Guaranty Corporation last month for $3.4 billion in a cash-and-stock deal. During the second quarter, the ownership of AIG among the funds in our database declined by nine to 85 and the aggregate value of their holdings in it came down by $1.1 billion.

#2 AerCap Holdings N.V. (NYSE:AER)

– Shares Owned by Perry Capital (as of June 30): 5.92 million

– Value of Holding (as of June 30): $199.02 million

AerCap Holdings N.V. (NYSE:AER) was the only stock among Perry Capital’s five largest equity holdings in which the fund increased its stake during the second quarter, albeit by just 1%. Shares of the Ireland-based aircraft leasing company suffered an over 40% drop at the beginning of 2016, but managed to bounce back swiftly after that and are currently trading down by 6.63% for the year. On August 22, within two weeks of reporting much better-than-expected numbers for its fiscal second quarter, AerCap Holdings N.V. (NYSE:AER) announced that its Board had authorized a new share repurchase program of $250 million to run through December 2016.  This is the third time this year that AerCap’s Board has authorized a $250 million repurchase program, with the first one having been announced in February and the second one in May. On August 23, analysts at FBR & Co. reiterated their ‘Hold’ rating on the stock and set a price target of $40 on it. AerCap saw a major drop in its popularity among hedge funds during the second quarter, as there were 13 fewer long the stock, while the aggregate value of their AerCap holdings fell by over $400 million.

#1 Ally Financial Inc (NYSE:ALLY)

– Shares Owned by Perry Capital (as of June 30): 15.76 million

– Value of Holding (as of June 30): $207.15 million

Ally Financial Inc (NYSE:ALLY) continued to remain Perry Capital’s largest equity holding at the end of June, despite the fund having reduced its stake in the company by 31% during the second quarter. Other hedge funds that reduced their stake in the company during that time included Fortress Investment Group and Andy Redleaf‘s Whitebox Advisors. Shares of the bank and financial holding company have appreciated by nearly 6% so far this year,with most of those gains coming in the last two months. However, analysts who track the stock think that it is still trading at a deep discount to even the most conservative estimate of its intrinsic value. According to them, the stock could  have significant upside going forward as the company transitions to a bank model. Currently, 13 of the 17 leading analysts on Wall Street who track the stock have a ‘Buy’ rating on it. At the end of June, there were 49 hedge funds in our database with long positions in Ally Financial Inc (NYSE:ALLY), which held almost 16% of the company’s float in aggregate.

Disclosure: None