In this article, we will be taking a look at the top 10 stock picks of Randall Smith’s Alden Global. To skip our detailed analysis, you can go directly to see the Top 5 Stock Picks of Randall Smith’s Alden Global.
Randall Smith is a major hedge fund investor, who established Alden Global in 2007. He initially worked as a partner in Bear Stearns, from 1975 to 1995, during which he also began his first investment firm with $20,000. In the 15 years that Alden Global has been active, it has risen quickly and focused mainly on newspaper operators, becoming one of the largest newspaper operators in the US, though it has been accused by many of gutting these newspapers instead of helping them flourish.
Perhaps the biggest impact that Alden Global made was flattening the Chicago Tribune after purchasing it, a move which drew the attention of the national press, most of which was not very flattering. However, the fund continues to grow and flourish, with a current portfolio value of more than $84.5 million, with an increase of +2.1% in the latest quarter, which is no mean feat considering the fact that even the S&P 500 index declined by 4.6% in the same timer period, as fears of recession abound.
With changing economic times, Alden Global has changed its holdings as well, dropping some famous stocks such as American Airlines Group Inc. (NASDAQ:AAL), Alaska Air Group, Inc. (NASDAQ:ALK), Alibaba Group Holding Limited (NYSE:BABA) and Peloton Interactive, Inc. (NASDAQ:PTON). Peloton Interactive, Inc. (PTON) has constantly been in the news over the past year as its share price has nosedived, since as pandemic restrictions have been eased, people have preferred to go out and visit gyms rather than workout at home. Peloton Interactive, Inc.’s (PTON) reached a high of $160 in January 2021, but is currently trading at about $10.
Meanwhile, Alden Global’s divestment from American Airlines Group Inc. (NASDAQ:AAL), Alaska Air Group, Inc. (NASDAQ:ALK) and Alibaba Group Holding Limited (NYSE:BABA) has allowed it to focus more on other companies which it believes have the potential to grow further.
Photo by Adam Nowakowski on Unsplash
Methodology
We used Alden Global Capital’s Q1 portfolio and picked the top 10 stocks.
10. New Oriental Education & Technology Group Inc. (NYSE:EDU)
Alden Global’s Stake Value: $2.5 million
Number of Hedge Fund Holders: 25
New Oriental Education & Technology Group Inc. (NYSE:EDU) provides educational services in China. In 2006, New Oriental Education & Technology Group Inc. (NYSE:EDU) was listed on the New York Stock Exchange, making it the first Chinese educational institution to be listed in the United States. The company has been looking to pivot ever since Beijing has cracked down on for-profit private education institutions, switching to livestreaming e-commerce which gained attention on social media.
However, some hedge funds have been a bit cautious with New Oriental Education & Technology Group Inc. (NYSE:EDU), with Polen Capital mentioning it in its Q3 2021 investor letter. Here is what it said:
“The quarter’s leading detractors were Chinese companies that were impacted by the CCP’s regulatory crackdown and liquidity concerns at property developer Evergrande. New Oriental Education—the largest provider of private educational services in China—moved sharply lower in July after policymakers implemented new rules which effectively turned Chinese tutoring companies into non-profits. Looking at New Oriental Education, we closed our position as soon as government policy became clear and used the proceeds to allocate to existing holdings.”
9. Kohl’s Corporation (NYSE:KSS)
Alden Global’s Stake Value: $3.038 million
Number of Hedge Fund Holders: 42
Kohl’s Corporation (NYSE:KSS) is one of the most famous American departmental stores, as well as the biggest, with more than 1,100 locations in every single state except for Hawaii. With a $3 million stake, Alden Global definitely believes in the future of Kohl’s Corporation (NYSE:KSS).
Nowadays, Kohl’s Corporation (NYSE:KSS) is in the news for a proposed sale to the owner of The Vitamin Shoppe, Franchise Group Inc. The press release of Kohl’s Corporation (NYSE:KSS) mentioned that the company board “remains focused on selecting the path that maximizes value for all Kohl’s shareholders.” Whether the deal goes through or not depends on the approval of the board of directors of both companies.
8. EQT Corporation (NYSE:EQT)
Alden Global’s Stake Value: $4.043 million
Number of Hedge Fund Holders: 52
EQT Corporation (NYSE:EQT) is an independent natural gas producer with an aim to future-proof the company. The company aims to replace international coal purchases with natural gas produced and supplied in the United States, which according to EQT Corporation (NYSE:EQT) is the biggest green initiative in the world right now.
An investment management firm, Clearbridge Investments published its ‘Dividend Strategy’ Q3 2022 investor letter, where it mentioned EQT Corporation (NYSE:EQT). Here is what it said:
“In the early days of the invasion, we made two measured changes to the portfolio based on longer-term fallout we anticipate from Russia’s invasion of Ukraine. First, we initiated small positions in U.S. natural gas producer EQT (NYSE:EQT).
Given its superior environmental profile compared to other fossil fuels, we have long favored natural gas in our energy holdings. Combustion of natural gas releases 50% less CO2 than coal, 25% less CO2 than gasoline and dramatically less particulate and pollution, per the U.S. Energy Information Administration. With the advances in shale production this century, the U.S. has become a natural gas powerhouse with some of the lowest-cost and largest reserves in the world. But because natural gas is difficult to ship across the ocean (it must be liquefied, which requires expensive infrastructure on both ends of the voyage), America’s gas bounty has ironically proved a burden for U.S. producers.”
7. International Game Technology PLC (NYSE:IGT)
Alden Global’s Stake Value: $5.168 million
Number of Hedge Fund Holders: 34
International Game Technology PLC (NYSE:IGT) is a major multinational company which specializes in slot machines and other gambling related technology. Headquartered in London, International Game Technology PLC (NYSE:IGT) recently announced that it will start to deliver its video lottery terminals in Canada, starting with 960 machines, which may have contributed to it being one of the top 10 stock picks of Randall Smith’s Alden Global.
Palm Harbour Capital, which is an asset management firm, mentioned International Game Technology PLC (NYSE:IGT) in its Q4 2021 investor letter. Here is what is said:
“The second largest contributor was International Game Technology, the Italian American lottery and slot machine company, which we introduced in our first quarter 2020 letter and which contributed 78 basis points to performance. Early in the quarter, IGT’s main competitor, the highly levered Scientific Games, entered into a definitive agreement to sell its lottery business to Brookfield Business Partners for total consideration of $6.1 billion in cash and contingent payout. At $471 million last twelve months EBITDA (admittedly COVID affected, excluding unallocated central costs), Scientific Games lottery business was sold at trailing 13.0x. Scientific Games exited lottery business to optimize the portfolio and aggressively de-lever its balance sheet. We believe IGT’s lottery business to be much higher quality and certainly larger. If we were to use a similar metric for IGT, including all corporate costs but excluding Gaming and Digital and Betting, we would have around 90% upside. We are willing to bet the Gaming and fast growing Digital and Betting segments are worth something as well. It seems the sell-side willfully ignores this transaction and sticks with their 7-8x EV/EBITDA valuation.
The company reported third quarter earnings with sales up by 21% year on year, EBIT up by 144% and leverage down to 3.8x from 6.4x at year-end 2020. Total Adjusted EBITDA improved by 42% with margin gaining 618 basis points. Following the recovery, management reinstated the dividend of $0.20 per share…”
6. Schnitzer Steel Industries, Inc. (NASDAQ:SCHN)
Alden Global’s Stake Value: $6.264 million
Number of Hedge Fund Holders: 10
As evidenced by its name, Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) manufactures steel and also recycles scrap metal, bringing in revenues close to $2 billion. The stock price of Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) recently hit a one year low, even as analysts at KeyCorp increased their target price from $59 to $62 while The Goldman Sachs Group, Inc. (NYSE:GS) set a ‘Buy’ rating for the company.
Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) also recently paid a dividend in May which represents a yield of 2.2%. Meanwhile, SVP Peter Saba recently sold 1,178 shares of the company at an average price of $44.46.
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Disclosure. None. Top 10 Stock Picks of Randall Smith’s Alden Global is originally published on Insider Monkey.
