Home Loan Servicing Solutions Ltd (HLSS), Ocwen Financial Corp (OCN), News Corp (NWS): Kingstown Capital’s Latest Moves and Top Picks

Let’s take a look now at Kingstown’s top three picks at the end of 2014. Its top pick at the close of the year was in News Corp (NASDAQ:NWS), in which it held an even 5.0 million shares. That was a 25% increase on the position from the close of the previous quarter, when it held an even 4.0 million shares. Kingstown’s allocation of 11.38% of its portfolio value to News Corp makes it the second-most bullish fund in that metric among the funds we track, with only Newtyn Management’s 3.60 million share position, 14.37% of that fund’s portfolio, being higher. News Corp. is up 11.54% year-to-date.

The second-most valuable position in Kingstown’s portfolio was in Gencorp Inc (NYSE:GY) with 3.75 million shares. The 100-year-old company is now involved in the manufacture of aerospace parts through its Aerojet Rocketdyne brand, as well as possessing a real estate division called Easton Real Estate. Gencorp Inc (NYSE:GY) is up 5.46% year-to-date on the strength of its most recent quarterly and year-end earnings report on January 30.

Despite reporting a loss of $53 million in fiscal 2014 (partly due to the integration costs involved in its 2013 purchase of Pratt & Whitney Rocketdyne, which was folded into what is now Aerojet Rocketdyne), sales were up 15.5% year-over-year, to $1.60 billion, and its backlog of funded projects grew to $2.2 billion from $1.7 billion at the end of fiscal 2013. Warren Lichtenstein’s Steel Partners was another big believer in Gencorp Inc (NYSE:GY), with 10.08% of its portfolio tied up in the 4.18 million shares it held in the company.

Lastly is Spirit AeroSystems Holdings, Inc. (NYSE:SPR), which Kingstown held 1.50 million shares of at the end of the year. The position was unchanged from the end of the previous quarter, though it moved up to 9.37% of Kingstown’s portfolio from 8.34%, as it enjoyed a strong fourth quarter, up 11.82%, and has enjoyed a particularly strong run since the beginning of the second quarter of 2014, up 74.57%. Brian Jackelow’s SAB Capital Management has been one of the biggest beneficiaries of that run, purchasing 6.80 million shares just before the run started, in the first quarter of 2014, and shedding 2.95 million of those shares since for a large profit. It is still one of Spirit’s largest shareholders, with 3.86 million shares. The manufacturer of aerospace systems beat estimated earnings in its most recent financial results, posting adjusted earnings per share of $0.87, topping estimates of $0.77 by 13%. Shares are up another 14.34% year-to-date.

Disclosure: None