Tontine Asset Management’s Bets on Small-Caps Help Offset Losses

#3 Citigroup Inc (NYSE:C)

– Shares Owned by Tontine Asset Management (as of June 30): 400,010

– Value of Holding (as of June 30): $16.96 Million

Moving on, Citigroup Inc (NYSE:C) was another major holding in Tontine Asset Management’s equity portfolio in which the fund increased its stake during the second quarter, by 56%. Similar to Bank of America Corp, Citigroup Inc also hiked its dividend recently and now pays a quarterly dividend of $0.16 per share, up 220% from the $0.05 per share quarterly dividend it paid earlier. This hike in dividend coupled with a 11% year-to-date decline in Citigroup Inc (NYSE:C)’s stock has helped in raising its annual dividend yield, which currently stands at 1.37%. On September 16, Goldman Sachs Group Inc.’s analyst Richard Ramsden released a note in which he downgraded the stock to ‘Neutral’ from ‘Buy’  and also lowered his price target on it to $50 from $52. In his note, Mr. Ramsden mentioned that the earnings inflection point he had expected from the company has failed to materialize and the Citigroup Inc’s current  ROE at 7.62% is well below management’s target of 10%. According to Mr. Ramsden, Citigroup Inc’s expense discipline and growth in higher return businesses like credit cards and wealth management will not be enough to boost the company’s ROE to double-digits. At the end of June, there were 97 hedge funds covered by us that were long Citigroup Inc with the aggregate value of their holdings in it amounting to $8.50 billion.

#2 Patrick Industries, Inc. (NASDAQ:PATK)

– Shares Owned by Tontine Asset Management (as of June 30): 1.26 Million

– Value of Holding (as of June 30): $76 Million

Patrick Industries, Inc. (NASDAQ:PATK) was the only stock among Tontine Asset Management’s eight largest equity holdings in which the fund reduced its stake during the second quarter, by 4%. Other hedge funds that lowered their stake in the company during that period included Richard Driehaus‘ Driehaus Capital and Brandon Osten‘s Venator Capital Management. Patrick Industries, Inc. (NASDAQ:PATK) has been the best performing stock in North America in the last seven years since Todd Cleveland became the CEO of the company on February 1, 2009. In the period since then, the stock has appreciated by over 16,000% and is currently trading up 38% for 2016. For its most recent quarter, the company reported EPS of $1.10 on revenue of $315.20 million versus analysts’ expectation of EPS  of $0.98 on revenue of $292.68 million. During the second quarter, the ownership of the company among funds covered by us increased by four to 19 and the aggregate value of their holdings in it jumped $309 million to $1.31 billion.

#1 IES Holdings Inc (NASDAQ:IESC)

– Shares Owned by Tontine Asset Management (as of June 30): 13.36 Million

– Value of Holding (as of June 30): $165.96 Million

IES Holdings Inc (NASDAQ:IESC) made its debut in Tontine Asset Management’s equity portfolio during the second quarter and was the largest holding of the fund, in terms of value, at the end of that period. IES Holdings is a  holding company that owns and manages subsidiaries that cater to different end markets , which include communications, residential, commercial & industrial, and infrastructure solutions. IES Holdings Inc (NASDAQ:IESC)’s stock recently reached its lifetime high at $18.61 and is currently trading up over 40% for 2016. On August 8, the company reported its fiscal 2016 third quarter numbers, declaring EPS of $0.34 on revenue of $176.94 million for the period, compared to EPS of $0.19 on revenue of $144.1 million it had reported for the same quarter last year. Though the ownership of IES Holdings Inc (NASDAQ:IESC) among funds covered by us remained unchanged at five during the second quarter, the aggregate value of their holdings in it during that time fell by $34.6 million to $187.77 million.

Disclosure: None