Star Bulk Carriers Corp. (NASDAQ:SBLK)’s losses widened to $40.1 million, or $0.26 per share, in the first quarter of 2015 compared to a loss of $878,000 in the same year-ago quarter. Adjusted EPS was $0.20, the same as analyst estimates, on revenues of $45.5 million, significantly higher than its $20.18 million in sales in the same quarter last year, though still lower than the $47.5 million consensus. The firm’s stock went down 5.7% on Monday to close at $2.98 per share and slid by a further by 7.26% yesterday, June 30, to close at $2.94 per share. The stock has plummeted 77.3% from a year ago while over the course of the current year, the stock has tumbled 51.57%. Star Bulk Carriers Corp. (NASDAQ:SBLK) CEO Petros Pappas commented that the dry bulk shipping market experienced “a new historical low” in the first quarter which has consequently affected the firm’s financial performance. The top executive of the largest dry bulk ship owner listed in the U.S., however, highlighted his firm’s low cost of operation per vessel which he said was reduced by 7% compared to the full 2014 fiscal year.
The rather uninspired performance of the company in the first quarter of the year deviates from at least one hedge fund manager’s interest. Howard Marks of Oaktree Capital Management was the largest holder of Star Bulk Carriers shares at the end of the first quarter with a stake worth close to $298.2 million in 82.15 million shares, corresponding to 3.1% of the Oaktree’s total 13F portfolio, among the funds tracked by Insider Monkey. The fund held 51.23 million shares of the ship-owning firm at the end of the fourth quarter, during which the fund did not have any activity while the value of the stake dove to $336.10 million as the stock’s price plunged 38.7% during the third quarter of the year. Aside from the Oaktree Capital Management nod, however, investors should pay attention to a decrease in support from the world’s most elite money managers in recent months.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 135% and beating the market by more than 80 percentage points in 34 months. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
We also track insider moves in companies to assess whether executives are accumulating or disposing of their own companies’ shares. For Star Bulk Carriers Corp., however, there were no recorded insider sales or purchases of shares in the first half of the year.
Keeping this in mind, we’re going to go over the recent action encompassing Star Bulk Carriers Corp.
What have hedge funds been doing with Star Bulk Carriers Corp. (NASDAQ:SBLK)?
Heading into the second quarter, a total of five of the hedge funds tracked by Insider Monkey were long in this stock, down 17% from the fourth quarter of 2014. However, in terms of total value of holdings, investment seems to have increased. Total value of holdings went from $386.08 million by the end of the fourth quarter of 2014 to $350.94 million by the end of the first quarter of 2015, a 9.10% decrease when the figures alone are considered. However, seeing that the stock declined 44.66% in value in the first quarter, it appears that hedge funds who were long on this stock increased their holdings’ values.
As mentioned earlier, Howard Marks’ Oaktree Capital Management had the most valuable position in Star Bulk Carriers Corp. (NASDAQ:SBLK). The second most bullish hedge fund manager is Monarch Alternative Capital, managed by Michael Weinstock, which held a $34.9 million position in 9.61 million shares; the fund has 8.4% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish comprise Mark Weissman, Adam Cohen and David Coleto’s Caspian Capital Partners, Matthew Tewksbury’s Stevens Capital Management and Ken Griffin’s Citadel Investment Group.
Seeing as Star Bulk Carriers Corp. (NASDAQ:SBLK) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds that decided to sell off their entire stakes at the end of the first quarter. Intriguingly, Michael Reeber‘s Andalusian Capital Partners dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at $864,000 comprised by 131,750 shares. Israel Englander of Millennium Management was right behind this move, as the fund cut $309,000 in 47,041. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds at the end of the first quarter.
Despite Oaktree Capital Management’s apparent confidence in the stock by the end of the first quarter, Star Bulk Carriers Corp. (NASDAQ:SBLK)’s share price and financial performance leads us to not recommend a long position on this stock.
Disclosure: None
