Silver Point Capital’s Bullish Q1 Moves Include New Stake in Embattled Drugmaker Valeant

Silver Point Capital L.P. is a Connecticut-based credit and distressed debt firm founded by two former Goldman Sachs partners, Edward A. Mule and Robert J. O’Shea. The asset manager was founded in 2002 and was named the top-ranked hedge fund in 2013, according to the annual Hedge Fund Report Card survey from Institutional Investor’s Alpha. The respondents of this survey are asked to rank hedge fund vehicles, according to eight criteria, which include alpha generation, risk management, alignment of interests, transparency, infrastructure, independent oversight, liquidity terms and investment relations. Silver Point ranked second a year later, earning an “A” grade in seven of the eight Hedge Fund Report Card categories. “They are very good at understanding the credit markets and finding opportunities, especially opportunities not evident to a lot of the market”, said one investor in the not-so-distant past. Having this in mind, Insider Monkey decided to have a look at several bullish moves made by the Connecticut-based investment firm during the first quarter of the year.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

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#5. American International Group Inc. (NYSE:AIG)

– Shares owned by Silver Point Capital as of March 31: 1.87 Million

– Value of Silver Point Capital’s holding as of March 31: $100.80 Million

Silver Point Capital upped its position in American International Group Inc. (NYSE:AIG) by 337,000 shares during the first three months of 2016, ending the March quarter with 1.87 million shares valued at $100.80 million. The increased stake accounted for 11.5% of the asset manager’s entire portfolio at the end of March. The U.S. insurer was under intense pressure in the second half of 2015 from activist investor Carl Icahn, who wanted AIG to divide its mortgage, life, and property and casualty insurance divisions into three separate companies. Although AIG was not necessarily buying what Mr. Icahn was selling, the insurance behemoth has been busy getting smaller and simpler. Earlier this year, the insurer increased its boardroom by two members and appointed one of Mr. Icahn’s designees and billionaire John Paulson to the Board. AIG shares are down 9% since the beginning of 2016. Carl Icahn’s Icahn Capital LP owns 44.42 million shares of American International Group Inc. (NYSE:AIG) as of March 31.