Shah Capital’s Newest Stock Picks and Old Favorites

Shah Capital is a hedge fund firm founded by its current President and Chief Investment Officer, Himanshu H. Shah, in 2005. The asset manager seeks unique investment opportunities by focusing on deep value, turn-around and special situation opportunities. Shah Capital engages in a so-called “soft activism”, as the investment firm has been involved in a series of corporate turnarounds, asset spin-offs, recapitalizations, and strategic investments.

Mr. Shah, who has more than 25 years of experience in the capital markets, established his own asset management firm after spending years as a senior portfolio manager at UBS. Himanshu H. Shah and his team believe that the underlying value of a business does not change as often as their stock prices do, a discrepancy that they try to capitalize on. The North Carolina-based asset manager recently filed its 13F for the June quarter, so this article will lay out the new additions to Shah Capital’s portfolio during the quarter, as well as discuss several of the firm’s longstanding top stock picks.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

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New Position: Aegean Marine Petroleum Network Inc. (NYSE:ANW)

 – Shares Owned by Shah Capital (as of June 30): 241,961

 – Value of Shah Capital’s Holding (as of June 30): $1.33 Million

During the second quarter of 2016, Shah Capital acquired a new stake of 241,961 shares of Aegean Marine Petroleum Network Inc. (NYSE:ANW). The new stake was worth $1.33 million on June 30 and made up 1.0% of the firm’s public equity portfolio. The international marine fuel logistics company has seen its market value plunge by 22% since the start of 2016. Aegean Marine posted record sales volumes of 4.21 million metric tons for the first quarter of 2016, despite low commodity prices. The company’s top line decreased by 25.8% year-over-year to $752.9 million, mainly due to depressed crude oil prices throughout the first quarter. Aegean Marine commenced bunkering operations in Algoa Bay, South Africa during the quarter, with the company currently serving 33 markets worldwide. The company’s bottom line decreased by 3.3% year-over-year to $11.8 million or $0.24 per share. Richard Mashaal’s RIMA Senvest Management owned 4.46 million shares of Aegean Marine Petroleum Network Inc. (NYSE:ANW) at the end of March.

New Position: JA Solar Holdings Co. Ltd. (ADR) (NASDAQ:JASO)

 – Shares Owned by Shah Capital (as of June 30): 440,000

 – Value of Shah Capital’s Holding (as of June 30): $3.01 Million

The North Carolina-based asset manager also added a 440,000-share position in JA Solar Holdings Co. Ltd. (ADR) (NASDAQ:JASO) to its portfolio during the three months ending June 30, which was valued at $3.01 million at the end of the period. The new position accounted for 2.3% of the hedge fund’s portfolio. The shares of JA Solar, one of the world’s largest manufacturers of solar power products, are down by 28% since the start of 2016. JA Solar was among SunEdison’s suppliers of solar cells and solar modules, and the now-bankrupt SunEdison, which was the largest renewable energy company in the world at one point, is said to owe JA Solar around $10.4 million. The producer of solar power products recorded net revenue of $538.1 million for the first quarter, up by 44.4% year-over-year and down by 24.5% sequentially. The shameful bankruptcy of SunEdison may put some weight on JA Solar’s top line in the upcoming quarters. Noam Gottesman’s GLG Partners was the owner of 83,280 American Depositary Shares of JA Solar Holdings Co. Ltd. (ADR) (NASDAQ:JASO) on March 31.

The next page of this article will reveal yet another new addition to Shah Capital’s portfolio during the first quarter, as well as reveal the fund’s two largest equity positions.