Former Goldman Sachs partners Edward A. Mulé and Robert J. O’Shea founded Silver Point Capital in 2002, focusing on credit and special situations investments. The fund reportedly had $9.62 billion in assets under management at the end of the first quarter. Silver Point Capital also oversees an equity portfolio that carried a market value of $669 million at the end of September. The fund has concentrated most of its investments in consumer discretionary, financial and industrial stocks, which together account for 93% of its portfolio’s value.
To evaluate a fund manager’s ability to pick stocks, Insider Monkey analyzes their equity positions in companies that have a market cap of $1 billion or more. According to this metric, Silver Point Capital picks had weighted average returns of 14.76% in the third quarter from 10 stocks that qualified under the above-mentioned criteria. Those results placed the fund among the top-100 best performing funds in our database. In this article we’ll take a look at Silver Point’s bets on Cooper-Standard Holdings Inc (NYSE:CPS), American International Group Inc (NYSE:AIG), EnPro Industries, Inc. (NYSE:NPO), and Nortek Inc (NASDAQ:NTK), and see how these positions were adjusted heading into the fourth quarter.
First up is Cooper-Standard Holdings Inc (NYSE:CPS), Silver Point’s top dog. During the second quarter, the fund’s management chose to reduce its investment by 25%, taking it to 2.67 million shares worth $264 million at the end of September. Nevertheless, this is still an extremely important position, as it accounts for roughly 40% of the fund’s portfolio value. Cooper-Standard shareholders were all smiles at the end of the third quarter, as the stock returned 25.1% from July to September.
Hedge fund interest in the stock tumbled by 13% during the second quarter, with only 20 of the hedge funds tracked by Insider Monkey having reported a position in it as of the end of June. At that point, the largest stake in Cooper-Standard Holdings Inc (NYSE:CPS) was held by Silver Point Capital, followed by Park West Asset Management with a $23.2 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and Renaissance Technologies.
Next up is American International Group Inc (NYSE:AIG), a position initiated back in the beginning of 2011. During the previous quarter, Mulé and his team managed to lock in some profits, having sold out of 27% of their stake. According to the fund’s latest 13F filing, it held 1.55 million shares valued at $92.2 million at the end of September. The stock returned 12.8% during the third quarter.
During the second quarter, the number of hedge funds tracked by Insider Monkey that were invested in this stock fell by 10% to 85. Among those that kept their positions, Icahn Capital was the largest shareholder of American International Group Inc (NYSE:AIG), with a stake worth $2.41 billion reported as of the end of June. Trailing Icahn Capital was First Pacific Advisors, which amassed a stake valued at $658.1 million. Paulson & Co, Kensico Capital, and First Eagle Investment Management also held valuable positions in the company.
We’ll check out two more of the fund’s stock picks on the next page.