Brian Higgins’ King Street Capital Management has filed its 13F with the SEC for the reporting period of March 31. Higgins founded the firm in 1995, which is known for investing in distressed companies, bonds, foreign exchange, equity, options, and warrants. The fund manager is known to invest at a global level and his equity portfolio was valued at $179.13 million as of the reporting period. King Street has its primary investments in the materials, energy, transport, and information technology sectors, with 11 positions overall. Nine of Higgins’ previously held positions were closed during the past quarter, which included a long position in Sealed Air Corp (NYSE:SEE), and positions of put options underlying shares of both Intel Corporation (NASDAQ:INTC) and Deere & Company (NYSE:DE).
Delta Air Lines, Inc. (NYSE:DAL) is the most valuable holding of the fund manager. Higgins holds call options underlying 750,000 shares of the airline, with a market value of $33.72 million. Delta Air Lines, Inc. (NYSE:DAL) has a large network of international and domestic partners, which allows it to serve customers throughout the globe. Some of its primary international joint ventures include partnerships with Air France-KLM, Alitalia, and Virgin Atlantic. Alaska Airlines is another domestic marketing alliance of Delta Air Lines, Inc. (NYSE:DAL), which allows it to reach customers in the West Coast. The international airliner reported lower passenger revenue per available seat mile for April 2015, as it declined by 3.5% during the month. Lansdowne Partners, PAR Capital Management, and Andreas Halvorsen‘s Viking Global hold large investments in the airliner.
Southern Copper Corp (NYSE:SCCO) comes in at number two in Higgins’ portfolio. Southern Copper is the only new addition to the fund manager’s portfolio during the quarter and it’s a position of put options underlying 1.0 million shares of the company, with a market value of $29.18 million. Shares of the integrated copper producer have grown 15.66% year-to-date and it has a market cap of $26.17 billion. The copper producer is embroiled in controversy over its Tia Maria mining project in Peru, which has faced heavy protest for several weeks. Southern Copper Corp (NYSE:SCCO)’s administration has announced a 60-day halt to the project to come up with an appropriate solution. If a solution isn’t forthcoming it could be a huge setback for the company, which is planning to invest $1.4 billion in the project. Chilton Investment Company, Passport Capital, and Cliff Asness‘ AQR Capital Management are among the major investors of Southern Copper Corp (NYSE:SCCO).
King Street Capital has maintained its stake in International Paper Co (NYSE:IP) throughout the first quarter, with the investment manager holding call options underlying 500,000 shares of the company, with the holding having a market value of $27.75 million. The packaging company announced quarterly dividends of $0.40, which are to be paid on June 15. It has been a good first quarter for the paper company as its quarterly earnings of $0.84 beat consensus estimates by $0.04. International Paper Co (NYSE:IP) has a market cap of $22.42 billion along with a P/E ratio of 23.45. International Paper’s stock has an average rating of “Hold” and average price target of $54.22. D E Shaw, Perry Capital, and Venor Capital Management hold positions in the packaging company.
Yahoo! Inc. (NASDAQ:YHOO) was the fourth largest investment of Higgins during the first quarter. The investment manager owns 22.50 million convertible bonds of the technology company with a market value of $24.33 million. Yahoo! Inc. (NASDAQ:YHOO) is likely to release two more messaging apps next year, including one for group chat and another one with video, text, and calling features. Those apps will attempt to contend with heavily popular chat apps like WhatsApp and Viber. Daniel S. Och‘s OZ Management holds the largest position in Yahoo of the firms we track.
King Street Capital is just one of more than 700 hedge funds that we have in our database, whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most smaller investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of more than 139%, beating the S&P 500 Total Return Index by greater than 80 percentage points (see the details).
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