SandRidge Energy Inc. (SD), Freeport-McMoRan Copper & Gold Inc. (FCX): Litespeed’s Penchant For Distressed Assets Just Won’t Quit

Jamie Zimmerman founded Litespeed Management, an event-driven hedge fund focusing on special situations, distressed securities, and bankruptcies, in 2000. Zimmerman returned 118% between October 2000 and December 2005, vs. -13% for the S&P 500 index. With around $1 billion in assets under management, Zimmerman’s fund is part of the “elite” hedge fund club that you should pay attention to for its market-beating properties.

With that in mind, let’s take a look at the hedgie’s top five stock picks from last quarter, via her latest 13F filing:

1. T-MOBILE US INC (NYSE:TMUS)
2. McGraw Hill Financial Inc (NYSE:MHFI)
3. SandRidge Energy Inc. (NYSE:SD)
4. Theravance Inc (NASDAQ:THRX)
5. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)

T-MOBILE US INC (NYSE:TMUS) is at the top on the list with a value of $65.9 million. This represents a similar spot from one quarter earlier, where the freshly-IPOed company was worth a $62.6 million position. As is the case with many spinoff scenarios, the marketplace looks to have undervalued the telecom’s growth prospects out of the gate, and a value-based appreciation seems to be what’s driving positive momentum in T-Mobile shares. The stock is up more than 25% over the last three months alone.

Furthermore, McGraw Hill Financial Inc (NYSE:MHFI) stays at No. 2 and SandRidge Energy Inc. (NYSE:SD) is in at No. 3, with values of $62.5 million and $61.5 million, respectively. Both figures are up from one quarter earlier, and in the case of the latter, this comes despite the fact that SandRidge shares are down more than 17% year-to-date. Cash liquidity issues and above-average debt have forced SandRidge to cut back on operations a bit this year, but it’s clear that Zimmerman believes in the long-term value that the company holds in domestic energy.

Meanwhile, Theravance Inc (NASDAQ:THRX) takes the No. 4 spot; its value is $58.4 million, an increase from $35.9 million in Q1. Theravence was the 7th most valued company in Zimmerman’s equity portfolio one quarter earlier. Lastly, the new member of the top five is Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), with a value of $53.1 million. This is another distressed value play, made under the likely assumption that at least a partial reprise to higher metals prices of yesteryear will boost shares.

We’ll continue to watch this situation very closely.

Recommended reading:

Legendary Hedge Fund Thinks These 2 Stocks Can Join the $1,000-Club

Disclosure: none