American Airlines Group Inc (AAL), Quanta Services Inc (PWR): Tipp Hill Capital’s (Y/Cap Management) Top Q2 Picks

Tipp Hill Capital (formerly Y/Cap Management) is a hedge fund managed by Richard L. Haydon, which recently disclosed at the SEC its long equity positions as of June 30, 2014. This is the second quarter in which the fund reported under the Tipp Hill Capital Management LLC name. Its portfolio, worth more than $113 million is mainly focused on services (36%) and financial (22%) stocks. Over the second quarter, the fund started 10 new stock positions, increased its exposure to 7 of its preexisting ones, and sold out of another 18 of them. Let’s take a look at Tipp Hill’s top holdings for the second quarter of 2014:

The first spot in this list remained in the hands of American Airlines Group Inc (NASDAQ:AAL), a $30 billion market cap airline operator. The fund disclosed ownership of 244,941 shares of American Airlines Group Inc (NASDAQ:AAL), which implies a small increase in its position, which is now valued at more than $10 million, and accounts for roughly 9.3% of its total equity portfolio.

American Airlines Group

American Airlines Group Inc (NASDAQ:AAL)’s stock has gained about 67% year-to-date, and several other funds have been also making a profit from this upsurge. For instance, John Paulson’s Paulson & Co last declared holding 12.16 million shares of the company, worth almost half a billion dollars.

Quanta Services Inc (NYSE:PWR) rose from the eighth spot in the first quarter, to the second place in the second quarter, after the fund increased its stake by 21%, probably taking advantage of the 6.19% fall in the stock price that took place over the quarter. The fund now owns 230,000 shares (worth almost $8 million) of Quanta Services Inc (NYSE:PWR), a $7.46 billion market cap provider of specialty contracting services.

Other funds that seem to like Quanta Services Inc (NYSE:PWR)’s combination of a cheap valuation with industry leading margins, a great growth history and above-average returns are William Harnisch’s Peconic Partners Llc and Ross Margolies’ Stelliam Investment Management, which own 3.6 million shares and 1.8 million shares, respectively.

The third position in Tipp Hill’s list is occupied by a newcomer: Rentech, Inc. (NASDAQ:RTK), a $525 million market cap nitrogen fertilizer products producer. The fund acquired 3 million Rentech, Inc. (NASDAQ:RTK) shares over the second quarter of 2014, and now stands amongst the largest hedge fund investors in the company, with a stake worth $7.77 million.

On the opposite sidewalk, Bernard Selz’s Selz Capital trimmed its exposure to Rentech, Inc. (NASDAQ:RTK) by 73%, disclosing ownership of 700,000 shares by the end of the second quarter.

Republic Airways Holdings Inc. (NASDAQ:RJET) escalated from the nineth position in the first quarter, to the fourth spot in the second quarter, even though Tipp Hill’s position remained unaltered. Actually, the upsurge came as a result of Republic Airways Holdings Inc. (NASDAQ:RJET)’s stock appreciation over the quarter. The stock gained 22.5%, which means that the fund’s 712,000 shares are now worth more than $7.7 million.

Other prominent names investing in Republic Airways Holdings Inc. (NASDAQ:RJET) are Jim Simons, with 1.72 million shares (disclosed by the end of the first quarter), and Chuck Royce, with 825,434 shares.

Finally, there’s Newcastle Investment Corp. (NYSE:NCT), a $1.7 billion market cap real estate investment and finance company that saw Tipp Hill boost its stake by 18% over the quarter. The fund now owns 1.61 million shares of Newcastle Investment Corp. (NYSE:NCT), worth $7.7 million –according to the 13F filing.

Moreover, Mr. Haydon is not the only one that seems bullish about this stock. For instance, John Osterweis’ Osterweis Capital Management slightly upped its bets over the first quarter, to 12.6 million shares, while Morgan Stanley (NYSE:MS) declared on July 24, that it had doubled its stake in Newcastle Investment Corp. (NYSE:NCT), to 18.5 million shares.

Disclosure: Javier Hasse holds no position in any stocks or funds mentioned

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