Caspian Capital Partners is an activist hedge fund founded by Mark Weissman in 1997. Apart from Weissman, the fund’s current top leadership comprises co-portfolio managers and principals Adam Cohen and David Coleto. In 2011, Caspian Capital Partners was spun off from its parent Mariner Investment Group LLC into a separate entity and is now predominately owned by its employees. The fund recently filed its 13F for the reporting period of June 30 with the Securities and Exchange Commission. The filing revealed that at the end of June, Caspian’s U.S. public equity portfolio was worth only $182 million, significantly lower than the more than $533 million it was worth at the end of the first quarter. According to the filing, during the April-June period, Caspian sold its entire stake in four stocks, reduced its exposure to one stock, and made additional purchases in six stocks, while initiating a stake in seven stocks. The filing also revealed that stocks from the real estate sector, followed by utilities and telecommunications stocks, comprised the major chunk of Caspian’s equity portfolio, at 39% and 20% respectively. Although the fund invested a significant portion of its portfolio to short positions during the second quarter, in this article we are going to focus on its top three largest long positions in Star Bulk Carriers Corp. (NASDAQ:SBLK), EnPro Industries, Inc. (NYSE:NPO), and Globalstar, Inc. (NYSEMKT:GSAT).
Following activist funds like Caspian Capital Partners is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Caspian Capital Partners can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 34 months since our small-cap strategy was launched it has returned over 123.1% and beaten the S&P 500 ETF (SPY) by more than 66 percentage points (read more details).
Follow Mark Weissman, Adam Cohen And David Coleto's Caspian Capital Partners
After increasing its stake by 288% during the first quarter, Caspian Capital increased its stake in Star Bulk Carriers Corp. (NASDAQ:SBLK) by another 205% to almost 14.89 million shares during the second quarter, making the company the fund’s top pick at the end of that period. As of June 30, Caspian’s stake in Star Bulk Carriers Corp. (NASDAQ:SBLK) was worth almost $43.78 million. Shares of the shipping company have had a massive decline since September 2014 and are down by over 50% year-to-date, with 19% of that decline coming in the second quarter alone. Analysts have a consensus rating of ‘Overweight’ on the stock, with an average price target of $4.43, 50% above its current trading price of $2.92. For the second quarter of 2015, analysts expect the company to report an EPS loss of $0.16, 60% more than the $0.10 EPS loss it reported for the same quarter last year. Among the hedge funds we track, Howard Marks‘ Oaktree Capital Management held the largest stake in Star Bulk Carriers Corp. (NASDAQ:SBLK) at the end of March, of over 82 million shares.
EnPro Industries, Inc. (NYSE:NPO) was Caspian Capital’s second top stock pick at the end of the second quarter. The fund made an additional purchase of 116,428 shares of the company during that period, thereby increasing its stake to 484,347 shares valued at $27.71 million as of June 30. On June 3, the company announced that it had entered into an agreement to acquire Continental AG (ADR)(OTCMKTS:CTTAY)’s Veyance North-American air spring business, which was completed on July 1. Although shares of the industrial products company have declined significantly since late-April and are currently trading near the $50 mark, analysts have an average rating of ‘Overweight’ on the stock, with a consensus price target of $78.80. During the first quarter, while Edward A. Mule‘s Silver Point Capital increased its stake in EnPro Industries, Inc. (NYSE:NPO) by 8%, Bart Baum’s Ionic Capital Management reduced its stake in the company by the same magnitude.
Moving on to Caspian Capital’s third top pick for the quarter, Globalstar, Inc. (NYSEMKT:GSAT), the fund increased its position in the mobile services company by 24% during the second quarter. As of June 30, Caspian Capital held over 11.9 million shares of Globalstar, Inc. (NYSEMKT:GSAT) worth $25.13 million. Shares of the company suffered a rapid decline during the April-June quarter, losing 36.6% during that period. Of the three leading analysts that cover the stock on the Street, each of them has a ‘Buy’ rating on it, with a price target of $5.33, more than 150% above its current trading price of $2.11. Apart from Caspian, James Dinan‘s York Capital Management held a substantial stake in Globalstar, Inc. (NYSEMKT:GSAT) at the end of the first quarter, of 31.47 million shares, though it only ranked as the billionaire’s 35th most valuable long position.
Disclosure: None
