Howard Marks’ Oaktree Capital Management increased its stake in Star Bulk Carriers Corp (NASDAQ:SBLK) by more than 30.9 million shares, or 60%, this Thursday. According to the 13D Form filed with the U.S. Securities and Exchange Commission, the fund now owns 82.1 million Common Shares, representing 51.9% of the company’s outstanding stock. The latest transaction reaffirms Oaktree Capital Management’s bullish stance towards Star Bulk Carriers, which was already its largest position last quarter, accounting for 9.35% of its equity portfolio.
After working at TCW Group Inc for ten years, Howard Marks got together with several individuals and founded Oaktree Capital Management in 1995. The Los Angeles based investment firm, which specializes mainly in alternative investments, has a highly diversified equity portfolio, valued at around $6 billion. In addition to alternative investments, the fund focuses on distressed debt, corporate debt, and convertible securities. Furthermore, Oaktree Capital Management favors companies that are less popular amongst major institutional investors, thus often swimming against the current. This strategy has resulted in a turnover rate of 35% during the third quarter of 2014, with the firm’s top 10 holdings delivering returns of 32.7% in the same period. In addition to Star Bulk Carriers Corp (NASDAQ:SBLK), which constitutes its largest holding, Oaktree Capital Management’s top picks last quarter included Dynegy Inc (NYSE:DYN) and First Bancorp (NYSE:FBP). In all three cases, Howard Marks’ firm is the largest institutional shareholder, thus demonstrating a high level of optimism regarding the future performance of these stocks.
Star Bulk Carriers Corp (NASDAQ:SBLK) is a $428 million market cap shipping company headquartered in Athens, Greece. It is an international provider of seaborne transportation solutions in the dry bulk sector, with a fleet of 103 vessels. The company transports a wide range of dry bulk commodities, such as coal, iron ore, grains, and minor bulks, as well as bauxite, phosphate, fertilizers, and steel products. Furthermore, Star Bulk Carriers offers vessel management services to third party dry bulk vessels. The latest increase in Oaktree Capital Management’s exposure to the company, took place during the primary underwritten public offering of 49 million Common Shares issued on Wednesday. The net proceeds generated by the offering, which amount to around $242 million, are intended for Star Bulk Carrier’s new building program and for general corporate purposes. Due to the pricing and upsizing of its primary offering of common shares, the price of the company’s stock dropped significantly. In fact, shares are currently trading at a new 52-week low of $4.71 as of Friday 16th, thus falling below the $5 price tag established during the latest public offering.
The recent increase in Oaktree Capital Management’s stake in Star Bulk Carriers Corp (NASDAQ:SBLK), coincides with the beginning of a new strategy announced by the shipping firm. The strategy seeks to bolster the company’s balance sheet and improve its liquidity position by selling some of its older vessels. In this sense, the Star Bulk Carriers disclosed a binding agreement it had entered with a non-related third party for the sale of one of the M/V Star Kim. Despite being built in 1994, the vessel had been acquired in August 2014 along with 33 other ships, and was only delivered at the beginning of December.
In addition to Oaktree Capital Management, Star Bulk Carriers Corp (NASDAQ:SBLK) enjoys the backing of a number of institutional investors. Michael Weinstock’s Monarch Alternative Capital holds the second-largest position in the company, which amounts to around 6.1 million shares. The New York-based firm is very bullish regarding the stock, as it makes up for 15.4% of its equity portfolio and is one of its top picks. Andrew Schwartz’ Adams Hill Capital also boasts a significant stake in the shipping firm, amounting to 860,500 shares as of the third quarter of 2014. Nevertheless, no other investment firm is as invested in Star Bulk Carriers future as Oaktree Capital Management, which owns more than half of the company’s outstanding stock.
Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.
