Oaktree Capital Management, which was founded by Howard Marks in 1995, is an investor in both debt and equity securities. In mid-November, Oaktree filed its 13F for the third quarter of 2012, disclosing many of its long equity positions. We went through the filing and compared it to the fund’s disclosure for the second quarter to identify which stocks Oaktree had added to its portfolio during the third quarter. Read on for our quick take on Oaktree’s five largest new stock positions reported on the 13F and see more stock picks from Howard Marks.
One new pick- and the fund’s second largest 13F holding overall by market value- was 14.1 million shares of Delphi Automotive PLC (NYSE:DLPH). Delphi is an auto parts company whose products include components related to the electrical, electronic, and powertrain systems. With auto demand low, it trades at only 9 times trailing earnings despite the fact that the company’s business was actually about flat last quarter compared to the third quarter of 2011. Fellow billionaire John Paulson’s Paulson & Co. cut its stake in the company by 22% during the third quarter, but still owned over 25 million shares at the end of September (find more of Paulson's stock picks). We think that the stock looks like a good value, though there may be even better deals at other auto related companies.
The fund initiated a position of about 780,000 shares in United Technologies Corporation (NYSE:UTX), a technology products and services company which produces Otis elevators and Pratt & Whitney aircraft engines. At a market capitalization of $73 billion, it trades at trailing and forward P/E multiples of 16 and 13 respectively. That implies that investors are expecting modest growth, and that is essentially what the company has done in its most recent results. Third Point, an activist and value fund managed by billionaire Dan Loeb, reported a position of 1.6 million shares in the company on its own 13F (check out Dan Loeb's favorite stocks). We think the stock looks priced about right- not too cheap, not too expensive.