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A. M. Castle & Co (CAS) and Other Bullish Picks of Raging Capital

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William C. Martin‘s Raging Capital Management has disclosed further increasing its stake in A. M. Castle & Co (NYSE:CAS) in a recent 13D filing with the Securities and Exchange Comission. The fund now owns 4.63 million shares versus the 3.37 million shares that it previously held, according to another 13D filing in January. Raging Capital’s current holding in the specialty metals and plastics distribution company represents 19.7% of the company’s outstanding common stock.

William Martin Raging Capital Management

William C. Martin has had considerable entrepreneurial success even before he founded his hedge fund, Raging Capital Management (stock picks, investor letters) in 2006. He co-founded one of the first financial websites, in 1997 when he was just 19 years old. The project was later sold for $160 million. Although having an annualized return of 25%, Raging Capital experienced limited success in 2014. According to the fund’s Q4 Investor letter, the fund returned 2.8% in its Series A Master Fund and 3.4% in Series B Master Fund. Most of these returns came from shorting stocks, as the short book gained 10.6% gross after borrow costs.

Raging Capital initiated a position in A. M. Castle & Co (NYSE:CAS) during the fourth quarter by purchasing some 3.37 million shares valued at $26.95 million. The position comprised 2.83% of the fund’s portfolio value. In a recent newly amended filing Joe Huber’s Huber Capital management also has revealed increasing its stake in A.M. Castle & Co to 2.57 million shares from 1.9 million shares. Huber Capital owns 10.9% of the company’s outstanding common stock.

A. M. Castle & Co (NYSE:CAS) is down nearly 75.5% over the last year. The company, which is undergoing massive restructuring experienced a substantial goodwill write off in the second quarter, and faced disappointing results for third and fourth quarters. Fourth quarter net loss per share of $1.64 was off the estimates by $1.21. However, the revenues of $231.47 million beat the estimates by $2.87 million.

Moving on to Raging Capital’s second largest holding, Vitesse Semiconductor (NASDAQ:VTSS), which  formed 5.68% of the funds portfolio value. Valued at $54.13 million and comprising of 14.32 million shares, the position remained unchanged during the fourth quarter. Richard Mashaal of Rima Senvest Management and Millennium Management’s Israel Englander owned 5.13 million shares valued at $19.40 million, and 1.56 million shares valued at $5.91 million respectively.

Vitesse Semiconductor (NASDAQ:VTSS) is up nearly 9% year to date amid second quarter financial results that missed estimates. The company’s net loss per share came in at $0.07 against the estimate of $0.04.

Martin added some  354,216 shares of Ply Gem Holdings Inc (NYSE:PGEM) to Raging Capital’s portfolio. The total stake in the manufacturer of residential exterior building products consisted of 3.59 million shares valued at $50.20 million at the end of 2014. Out of 737 hedge funds that we track at Insider Monkey, 14 held long positions in the company versus 12 funds a quarter earlier. Among these were Chuck Royce’s Royce & Associates holding 1.03 million shares valued at $14.35 million and Ken Griffin’s Citadel Investment Group with 465,749 shares valued at $6.5 million.

The $917.88 million company is down nearly 2.3% year to date. As for the third quarter financial results, Ply Gem Holdings Inc (NYSE:PGEM)’s Earnings per Share (EPS) of $0.32 beat estimates by a penny, but revenues of $437.8 million came in $6.9 million smaller than expected.

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