In this article, we discuss 10 stocks to buy according to Canyon Capital Advisors.
Canyon Capital Advisors is a Dallas-based hedge fund founded in 1990 by Joshua S. Friedman and Mitchell R. Julis. It’s a risk-adjusted asset management fund that aims to outperform bond and stock market indices while lowering volatility. Canyon Capital Advisors invests in both debt and equity, including high-yield financing.
Canyon Capital Advisors has $19 billion in assets under management, and between 2002 and 2011, its flagship fund returned 10.4% annually, compared to 3.3% for the S&P 500 index. Special-purpose acquisition corporations, according to Friedman, exemplify the breakdown of market discipline. Therefore the hedge fund stocked up on investment-grade bonds and structured securities at considerable discounts during the early stages of the pandemic’s challenges. Canyon Capital Advisors was able to cut losses in its flagship fund by 4% in 2020 due to this strategy. In 2021, the $8.6 billion fund was up 9.3%.
In the fourth quarter of 2021, Canyon Capital Advisors 13F public stock portfolio was valued at $2.94 billion, with a top 10 holdings concentration of 42.95%. As of the end of the fourth quarter of 2021, some notable stocks of Canyon Capital Advisors portfolio include Dell Technologies Inc. (NYSE:DELL) and VMware, Inc. (NYSE:VMW).
Joshua Friedman of Canyon Capital Advisors
The hedge fund has a $128.29 million stake in Dell Technologies Inc.. Canyon Capital Advisors’ bet on Dell Technologies Inc. is paying off. Dell Technologies Inc. shares are up 22.79% over the last 12 months as of March 27.
Another notable stock in Canyon Capital Advisors’ portfolio is VMware, Inc.. On February 25, Barclays analyst Raimo Lenschow reduced his price objective on VMware, Inc. from $140 to $135 but maintained an Overweight rating on the shares. Lenschow told investors in a research report that the company had an outstanding performance but the Q1 and fiscal 2023 outlooks were below estimates.
Our Methodology
We used Canyon Capital Advisors’ 13F portfolio for Q4 2021 for this analysis. All hedge fund data comes from Insider Monkey’s distinct group of 900+ funds that filed 13Fs for the fourth quarter of 2021.
Stocks to Buy According to Canyon Capital Advisors
10. Boyd Gaming Corporation (NYSE:BYD)
Canyon Capital Advisors’ Stake Value: $89,595,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 3.04%
Number of Hedge Fund Holders: 34
Boyd Gaming Corporation (NYSE:BYD) is a gaming company that manages gaming and entertainment assets. Boyd Gaming declared a quarterly dividend of $0.15 per share on February 7. In December 2019, the firm issued its last dividend of $0.07.
Canyon Capital Advisors increased its stake in Boyd Gaming Corporation in the second quarter by 63%. Its stake in the company is worth about $89.60 million in the fourth quarter of 2021.
According to Insider Monkey’s third quarter database, 34 hedge funds were bullish on Boyd Gaming Corporation, with stakes totaling $1.10 billion. HG Vora Capital Management holds the most significant stake in Boyd Gaming Corporation as of Q4 2021, with 4.10 million shares worth $268.84 million.
Just like Dell Technologies Inc. and VMware, Inc., Boyd Gaming Corporation is one of the stocks that hedge funds are buying.
Ariel Investments, an investment management firm, in its fourth quarter 2021 investor letter mentioned Boyd Gaming Corporation. Here is what the fund said:
“We also added casino and entertainment operator, Boyd Gaming Corporation (BYD), which derives most of its revenue from high loyalty and repeat customer base. BYD also owns a minority position in online daily fantasy sportsbook FanDuel. Throughout the pandemic, the company focused on improving operations to permanently lower its expense structure. These initiatives have resulted in margin expansion, strong free cash flow, and accelerated debt repayments. While we expect margins to decline somewhat from currently elevated levels, we believe the market is underestimating the earnings power of the company.”
9. Ardagh Metal Packaging S.A. (NYSE:AMBP)
Canyon Capital Advisors’ Stake Value: $90,723,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 3.08%
Number of Hedge Fund Holders: 30
Ardagh Metal Packaging S.A. (NYSE:AMBP) is a company that develops, produces, and sells metal beverage cans. It also provides technical and customer support. Following the Q4 results, Barclays analyst Michael Leithead decreased his price objective on Ardagh Metal Packaging S.A. to $10 from $12 and maintained an Equal Weight rating.
Canyon Capital Advisors strengthened its position in Ardagh Metal Packaging S.A. by buying 6.05 million additional shares in Q4 2021. This makes the fund’s stake in Ardagh Metal Packaging S.A. total 10.05 million shares worth $90.72 million.
Among the hedge funds tracked by Insider Monkey, 30 funds were long Ardagh Metal Packaging S.A. at the end of December 2021, with stakes totaling $398.27 million, as compared to 27 funds in the preceding quarter, holding stakes in Ardagh Metal Packaging S.A. worth $400.20 million.
8. Shaw Communications Inc. (NYSE:SJR)
Canyon Capital Advisors’ Stake Value: $105,166,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 3.57%
Number of Hedge Fund Holders: 19
Shaw Communications Inc. (NYSE:SJR) is a cable telecommunications and satellite television service provider. On January 25, CIBC analyst Robert Bek maintained an Outperform rating on Shaw Communications Inc., raising his price objective to C$40.50 from C$27.
According to the hedge funds monitored by Insider Monkey in Q4 2021, 19 funds reported owning stakes in Shaw Communications Inc., equaling $731.09 million, down from 21 funds in the previous quarter, holding stakes in Shaw Communications Inc. worth $892.63 million.
In the fourth quarter, Canyon Capital Advisors increased its stake in Shaw Communications Inc. by 335,300 shares, boosting its position by 11%. The hedge fund first invested in Shaw Communications Inc. in the third quarter of 2021. Canyon Capital Advisors owns more than 3.46 million shares of the company, worth more than $105.17 million as of Q4 2021.
7. Valaris Limited (NYSE:VAL)
Canyon Capital Advisors’ Stake Value: $115,137,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 3.91%
Number of Hedge Fund Holders: 30
Valaris Limited (NYSE:VAL) provides offshore contract drilling services to Bermuda and international oil and gas industries. Evercore ISI analyst James West began coverage of Valaris Limited on February 8 with an Outperform rating and a $72 price target.
In the fourth quarter of 2021, 30 hedge funds were bullish on Valaris Limited, up from 26 funds in the quarter earlier. Canyon Capital Advisors holds more than 3.20 million shares in Valaris Limited worth over $115.14 million, representing 3.91% of its portfolio. In the fourth quarter of 2021, the hedge fund cut its stake in the company by 7%.
6. Xilinx, Inc. (NASDAQ:XLNX)
Canyon Capital Advisors’ Stake Value: $116,617,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 3.96%
Number of Hedge Fund Holders: 68
Xilinx, Inc. (NASDAQ:XLNX) creates highly adaptable and flexible computing platforms that enable fast innovation across many technologies, including cloud, edge, and endpoint. On the other hand, Canyon Capital Advisors revealed a 70% reduction in his holdings in Xilinx, Inc.. The investment has a value of $116.62 million and 550,000 shares as of the fourth quarter of 2021.
According to Insider Monkey’s Q4 database, 68 hedge funds were long Xilinx, Inc., down from 62 funds in the preceding quarter. Matthew Halbower’s Pentwater Capital Management is one of the leading stakeholders of Xilinx, Inc., with 4.05 million shares worth almost $857.87 million.
On February 14, Advanced Micro Devices (NASDAQ:AMD) announced the completion of its acquisition of Xilinx, Inc. and the appointment of Dr. Lisa Su as the new chairperson of the board.
In addition to Dell Technologies Inc. and VMware, Inc., Xilinx, Inc. is a notable stock from Canyon Capital Advisors’ Q4 portfolio.
5. Dell Technologies Inc. (NYSE:DELL)
Canyon Capital Advisors’ Stake Value: $128,292,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 4.36%
Number of Hedge Fund Holders: 62
Dell Technologies Inc. is a global provider of information technology solutions, products, and services that it designs, develops, produces, distributes, sells, and supports. Evercore ISI analyst Amit Daryanani upgraded Dell Technologies Inc. to Outperform from In-Line with a $60 price target on March 8.
Canyon Capital Advisors owns more than 2.28 million shares of Dell Technologies Inc. worth $128.29 million, despite selling 3.54 million shares in the fourth quarter.
A total of 62 hedge funds in the Q4 database of Insider Monkey were bullish on Dell Technologies Inc., up from 60 funds in the quarter earlier. Elliott Management is a prominent stakeholder of Dell Technologies Inc., owning a $532.71 million position in the company as of Q4 2021.
In its third-quarter investor letter, Third Point Management mentioned Dell Technologies Inc.. Here is what the fund said:
“Michael Dell has created substantial value for shareholders since re-listing the company several years ago. Earlier this year, Dell Technologies announced that it would be spinning its $50 billion stake in VMWare, which we believe will unlock the underappreciated value of the Dell server and PC businesses. Dell’s best attribute has been strong free cash flow generation, which the company has used to de-lever and create significant latent value for equity holders. Looking ahead, we believe this core Dell business, which still trades at a discount to its hardware peer group, should instead command a premium multiple thanks to its leading market share, profitability, and impressive execution. There are few large cap companies which possess a nearly 10% FCF yield, 2.5% dividend yield and 1.5x leverage ratio; Dell is one of them.”
4. Santander Consumer USA Holdings Inc. (NYSE:SC)
Canyon Capital Advisors’ Stake Value: $131,112,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 4.46%
Number of Hedge Fund Holders: 15
Santander Consumer USA Holdings Inc. (NYSE:SC) is a technology-driven, full-service consumer finance corporation focusing on car loans and third-party servicing to more than 2.5 million clients throughout its credit spectrum. Santander Consumer USA Holdings Inc. is the fourth-largest holding of Canyon Capital Advisors.
In the fourth quarter of 2021, 15 hedge funds disclosed having positions in Santander Consumer USA Holdings Inc. worth $1.06 billion. In addition, Elliott Management held a significant stake in Santander Consumer USA Holdings Inc. in Q4, owning 16.74 million shares worth $223.4 million.
The Canyon Capital Advisors fund began building its stake in Santander Consumer USA Holdings Inc. in the first quarter of 2014. In the fourth quarter of 2021, Canyon Capital Advisors’ held 3.12 million shares worth about $131.11 million. The hedge fund increased its stake in Santander Consumer USA Holdings Inc. by 213% in the fourth quarter of 2021.
3. Tenet Healthcare Corporation (NYSE:THC)
Canyon Capital Advisors’ Stake Value: $137,138,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 4.66%
Number of Hedge Fund Holders: 49
Tenet Healthcare Corporation (NYSE:THC) is a healthcare company that offers various services. Hospital Operations and Other, Ambulatory Care, and Conifer are the company’s three segments. At the end of the fourth quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $2.15 billion in Tenet Healthcare Corporation, up from 47 the preceding quarter worth $1.91 billion.
On March 7, Jefferies analyst Brian Tanquilut boosted his price target on Tenet Healthcare Corporation to $125 from $120 and kept a Buy rating on the stock after the company revealed that it would forego a public spinoff of its Conifer business.
Canyon Capital Advisors started building its position in Tenet Healthcare Corporation in the fourth quarter of 2012. In the fourth quarter of 2021, it held over 1.68 million shares of the company, valued at $137.14 million. The company represents 4.66% of the hedge fund’s 13F portfolio.
In its Q3 2021 investor letter, Oakmark Funds mentioned Tenet Healthcare Corporation. Here is what the fund said:
“Tenet may be best known as the second-largest public hospital chain in the U.S., but its largest business is outpatient acute care centers. In early 2020, investors fled the health care industry because of the great uncertainty that the pandemic presented. The early days of the pandemic were very hard on the hospital industry especially, but as the Covid-19 surge peaked and diminished, hospitals were able to schedule elective procedures and engage in profitable activities.”
2. CBL & Associates Properties, Inc. (NYSE:CBL)
Canyon Capital Advisors’ Stake Value: $137,168,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 4.66%
Number of Hedge Fund Holders: 11
CBL & Associates Properties, Inc. is a United States-based real estate investment trust that focuses in retail malls in the Midwest and Southeast. Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors was the lead stakeholder in CBL & Associates Properties, Inc.. The fund owns more than 4.40 million shares of stock worth $137.17 million.
On January 27, EVgo, Inc. (NASDAQ:EVGO) and CBL & Associates Properties, Inc. announced a partnership to provide EVgo rapid charging to various retail locations, including Kansas’ first EVgo station.
Insider Monkey discovered 11 hedge funds had positions in CBL & Associates Properties, Inc. at the end of the fourth quarter of 2021. These holdings were worth a total of $296.11 million.
1. Berry Global Group, Inc. (NYSE:BERY)
Canyon Capital Advisors’ Stake Value: $181,890,000
Percentage of Canyon Capital Advisors’ 13F Portfolio: 6.19%
Number of Hedge Fund Holders: 43
Berry Global Group, Inc. (NYSE:BERY) provides tailored solutions for value-added engineered materials, non-woven specialty materials, and consumer packaging. Berry Global Group, Inc. stock represents 6.19% of Canyon Capital Advisors’ fourth quarter securities, with the hedge fund holding 2.47 million shares worth $181.89 million.
Morgan Stanley analyst Angel Castillo lifted his price objective on Berry Global Group, Inc. to $79 from $71 on January 20 and kept an Equal Weight rating on the stock. Ricky Sandler’s Eminence Capital is the most significant stakeholder of Berry Global Group, Inc., with 2.71 million shares worth $199.68 million.
As of the end of the fourth quarter, 43 hedge funds in Insider Monkey’s database held stakes in Berry Global Group, Inc., an increase compared to 39 funds in the preceding quarter.
Rhizome Partners, an investment management firm, in its third-quarter 2021 investor letter, mentioned Berry Global Group, Inc.. Here is what the fund said:
“Berry Global does what Berry Global does well. It generates a good chunk of cash flow. Building on our Berry Global experience, we built a 3% position in the SPAC warrants of Gores Holdings V. The company purchased the aluminum-packaging business of Ardagh and now trades as Ardagh Metal Packaging. Unlike most SPACs, Gores has a track record of achieving its EBITDA forecast. Ardagh Metal trades at a significant discount to Ball Corporation and has more exposure to higher-margin specialty cans. We believe the SPAC warrants have 3-4x upside and the common stock has the potential to double. The company may force us to exchange the warrants for common shares at a premium. In that case, our upside will be capped at about a triple.”
You can also take a peek at Top 6 Stocks to Buy Today According to Stephen Feinberg’s Cerberus Capital Management and 10 Stocks to Buy According to Himanshu Gulati’s Antara Capital
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This article is originally published at Insider Monkey.
