Paul Twitchell, a partner at Andy Redleaf’s Whitebox Advisors has revealed in an interview on CNBC some of what he believes to be the best investment opportunities now. He said that at Whitebox, they like to focus on “trades that provide great asymmetry between risk and reward;” this is what led them to the mortgage trade in the first place. Let’s thus take a look at some of the fund’s top picks for the last reported quarter –first quarter of 2014.
As Twitchell said in the interview, Whitbox likes bonds. Its top nine stakes are placed in bonds from companies like Western Refining, Inc. (NYSE:WNR), JetBlue Airways Corporation (NASDAQ:JBLU) and Tesla Motors Inc (NASDAQ:TSLA). These nine positions were worth more than half a billion dollars by the end of the quarter, and accounted for 27% of the fund’s total portfolio’s value.
The fund’s largest equity position is the one at YRC Worldwide Inc. (NASDAQ:YRCW), an $831 million market cap transportation services provider. Whitebox last disclosed ownership of 1.86 million shares, valued at $42 million –by the end of the first quarter. This position, started over the first quarter of 2014, accounted for approximately 1.8% of its total equity portfolio
However, the stock has gained an impressive 61.8% return between January and June of 2014. As reported recently, following the marked increase in YRC Worldwide Inc. (NASDAQ:YRCW)’s stock price that took place over the first semester of 2014, analysts expect a halt around current stock prices. Probably, the best moment for investing in this company has passed. However, those who saw the opportunity and bought the stock between August of 2013 and January of 2014 have certainly profited from their investment. This is also the case of Christopher Pucillo’s Solus Alternative Asset Management LP, which owns 2.54 million shares of the company.
Among Whitebox’s top 20 picks, 16 are represented by bonds, one ETF and only three long equity positions. Apart from YRC Worldwide Inc. (NASDAQ:YRCW), the fund is betting on EMC Corporation (NYSE:EMC), of which it owns 1.44 million shares, and American Capital Ltd. (NASDAQ:ACAS), in which it holds 2.41 million shares. Another fund that seems bullish about both these companies is Ken Griffin’s Citadel Investment Group, which owns 5 million shares of EMC Corporation (NYSE:EMC) and 934,061 shares of American Capital Ltd. (NASDAQ:ACAS). The fund increased its stakes in both companies over the last reported quarter. Similar is the case of Brian Taylor’s Pine River Capital Management, which owns considerably big stakes in both EMC Corporation (NYSE:EMC) and American Capital Ltd. (NASDAQ:ACAS).
Disclosure: Javier Hasse holds no position in any stocks or funds mentioned