CrossingBridge Advisors, an investment management firm, published its third-quarter 2022 investor letter – a copy of which can be downloaded here. The fund continues to find “money-good” bonds and leveraged loans that have attractive yields with potential for additional upside if anticipated events come to pass. On the other hand, the fund is avoiding industries that continue to struggle due to the impact of COVID. Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.
In its Q3 2022 investor letter, CrossingBridge Advisors mentioned Atlas Corp. (NYSE:ATCO) and explained its insights for the company. Founded in 2019, Atlas Corp. (NYSE:ATCO) is a Hong Kong-based global asset management company with a $4.3 billion market capitalization. Atlas Corp. (NYSE:ATCO) delivered a 8.25% return since the beginning of the year, while its 12-month returns are up by 12.04%. The stock closed at $15.35 per share on December 12, 2022.
Here is what CrossingBridge Advisors has to say about Atlas Corp. (NYSE:ATCO) in its Q3 2022 investor letter:
“Based in Vancouver, B.C., Seaspan is the world’s largest containership lessor with a fleet of 132 vessels comprising 8% of world capacity. The company is the largest asset owned by Atlas Corp. (NYSE:ATCO), an NYSE-listed company with market capitalization of $4.1 billion. In early August 2022, Atlas received a non-binding proposal to take it private via acquisition by Poseidon Acquisition, an entity formed by large shareholders and the Japanese liner giant ONE.
Per the terms of the 6.5% senior unsecured bond due February 2024, de-listing of the parent company would trigger the ability of bondholders to put the bond to the issuer at a price of 101. We were comfortable purchasing the bond after the takeover proposal was announced, because, even if the deal did not go through, the company’s debt (although a bit elevated at 7.0x EBITDA), would be well covered by its high value, critical infrastructure assets that support a gross loan-to-value ratio of only 64%.
Moreover, we also like the fact that the bonds are the company’s nearest debt maturity, due in early 2024, so that, if the acquisition is not completed, there is a likelihood that it will be repaid in February 2023 when it becomes a current liability, further enhancing return. The CrossingBridge Low Duration High Yield Fund (MUTF:CBLDX) purchased the bond in August at a yield-to-maturity of 6.22%, but with the expectation that the annualized total return will be much higher if the acquisition is completed. Late in 3Q22, it was reported that Poseidon had increased its bid, increasing the probability of a deal. We have continued to purchase the bonds opportunistically in 4Q22.”
Research, Investment, Finance
Our calculations show that Atlas Corp. (NYSE:ATCO) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Atlas Corp. (NYSE:ATCO) was in 29 hedge fund portfolios at the end of the second quarter of 2022, compared to 11 funds in the previous quarter. Atlas Corp. (NYSE:ATCO) delivered a 2.95% return in the past 3 months.
In April 2022, we published an article that includes Atlas Corp. (NYSE:ATCO) in 5 Best Stocks to Buy According to Billionaire Prem Watsa. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.
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Disclosure: None. This article is originally published at Insider Monkey.
