Founded by Himanshu H. Shah in 2005, Shah Capital Management is a research-driven global hedge fund, which has recently disclosed its equity portfolio for the first quarter of 2013. The hedge fund showed a strong focus on China-based companies, which represent its top holdings and which Mr. Shah has been increasing during the first three months of the year. However, an interesting development can be observed in the solar energy stocks, in which Shah reported significant cuts made over the quarter.
Overall, the equity portfolio of Shah Capital is worth $118.12 million, down from $133 million in the previous quarter. The fund has the largest portion (over 40%) invested in the industrial goods companies, while the technology sector accounts for around 17% of the portfolio. In this piece, we will take a closer look at some of the major holdings from Shah’s latest equity portfolio, as well as at the most notable moves made during the January-March period.
The same as in the previous round of 13F filings, China Yuchai International Limited (NYSE:CYD) has remained the top position in Shah’s equity portfolio. The fund solidified its exposure, by adding around 35,700 shares to the holding, raising it to some 2.34 million shares, with a reported value of $49.55 million. The stock price of the company remained basically unchanged during the quarter, picking up 1%. However, the company has reported its financial results for the last year, in February, disclosing a significant increase in net revenues, by 18% on the year to $2.6 billion, and earnings per share up by 22% to $3.05. China Yuchai International Limited (NYSE:CYD) is a holding company, with activities in auto parts manufacturing and distribution of electronic products among others.
The fund has been bullish on UTStarcom Holdings Corp (NASDAQ:UTSI), a company that Shah previously intended to acquire. At the end of March, Shah disclosed holding a total of 9.98 million shares of the company, up by almost 50% over the quarter. The total value of the stake amounts to $20.26 million. UTStarcom is a small cap provider of network solutions. Phil Frohlich‘s Prescott Group Capital Management reported holding around 2.31 million shares of the company as at the end of 2013. For the last year, UTStarcom Holdings Corp (NASDAQ:UTSI) expanded its net loss to $0.58 per share, from $0.33 a year earlier. For the current year, analysts expect the company to report a net loss of $0.06 per share.
In Chiquita Brands International Inc (NYSE:CQB), Shah Capital disclosed a $15.38 million position, which contains around 1.24 million shares, remaining basically unchanged over the quarter. Last month, Chiquita, a distributor of salads, healthy snacks, and bananas, announced about entering into a definitive agreement to combine with Fyffes. The stock-for-stock transaction will result in Chiquita Brands shareholders owning over 50% of the new company and is expected to end by the end of the year.
Corinthian Colleges Inc (NASDAQ:COCO) is another top holding on which Shah Capital has been bullish, raising its exposure by over 2.70 million shares to 5.97 million, worth $8.24 million. Earlier this year, Shah Capital sent a letter to the company, stating that they trust the quality of the education program and that the negativity surrounding the company is truly overdone. Moreover, the shareholder suggests that the company should buy back its stock as it trades at a big discount.
On the other hand, Shah Capital has reduced its stake in Canadian Solar Inc. (NASDAQ:CSIQ) by around 50% to 237,300 shares, worth $7.15 million. Earlier, Philip Hempleman‘s Ardsley Partners and Mark Kingdon‘s Kingdon Capital disclosed cutting their stakes in the company, to 1.43 million and 1.00 million shares respectively, held at the end of 2013. In the previous round of 13F filings, Shah also cut its stake by 20%, and the same trade can be noticed throughout the past several quarters. Canadian Solar is engaged in production of solar wafers, cells and module products. It trails a P/E of 47.xx, and has an average recommendation ‘Overweight.’
At the same time, Shah Capital sold out its stake in Trina Solar Limited (ADR) (NYSE:TSL), which was one of the top five positions at the end of the previous quarter, the stake containing 490,900 shares. The fund also limited its exposure to another solar energy company, Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE), by almost 60% to 310,900 shares.
Disclosure: none
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