In this article, we discuss 10 stocks to buy according to Mark T. Gallogly’s Centerbridge Partners.
Mark Gallogly and Jeffrey Aronson established Centerbridge Partners in 2005. Aronson began his legal career at Stroock & Stroock & Lavan before taking on the role of Centerbridge Partners’ investment activities manager. Although he still owns a sizable piece of Centerbridge Partners and is the fund’s inventor, Gallogly left the hedge fund in December 2020. For this reason, the words Centerbridge Partners and Mark Gallogly are used alternately in this article.
The Special Credit III Flex Fund of the New York-based hedge fund Centerbridge Partners generated a total return of 51% for 2021. The fund performed better thanks to investments, including the insurance company HCI Group Inc. and the auto parts producer Garrett Motion Inc. The $1.3 billion Special Credit III Fund, Centerbridge’s flagship product, generated a 37% total return for the year 2021.
The multi-strategy investment company Centerbridge Partners is well known for its private equity division. However, the fund also has a sizable interest in listed businesses. Centerbridge Partners favours using growth equity and buyouts to make majority stakes. The hedge fund’s second-quarter portfolio is valued at $1.13 billion, as per the latest 13F filings, with a top ten holdings concentration of 98.65%. The hedge fund looks to invest in businesses in the financial services, consumer, real estate, and transport sectors, with headquarters in the US, Western Europe, and South America. The most notable stocks in Mark Gallogly’s Centerbridge Partners’ 13F portfolio include Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN).
Our Methodology
This article discusses the 10 stocks to buy according to Mark T. Gallogly’s Centerbridge Partners. For this list, we collected data from Gallogly’s 13F portfolio as of Q2 2022.
Stocks to Buy According to Mark T. Gallogly’s Centerbridge Partners
10. Community Health Systems, Inc. (NYSE:CYH)
Centerbridge Partners’ Stake Value: $3,525,000
Percentage of Centerbridge Partners’ 13F Portfolio: 0.31%
Number of Hedge Fund Holders: 27
Community Health Systems, Inc. (NYSE:CYH) manages and runs hospitals. It runs general acute care hospitals and associated healthcare organisations that offer inpatient and outpatient medical services. Chuck Royce’s Royce & Associates is a remarkable stakeholder of Community Health Systems, Inc., with 1.77 million shares worth $3.81 million.
For the fiscal third quarter of 2022, Community Health Systems, Inc. reported a loss per share of $0.52, falling short of estimates by $0.50. In addition, the company’s revenue for the quarter came in at $3.03 billion, missing market estimates by $10 million.
Community Health Systems, Inc. was in 27 hedge funds’ portfolios at the end of the second quarter of 2022. There were 25 hedge funds in our database with Community Health Systems, Inc. at the end of the previous quarter.
Even though Mark T. Gallogly’s Centerbridge Partners slashed its stake in Community Health Systems, Inc. by 37% in the second quarter of 2022, it still owned 939,903 shares of the company, worth $3.53 million. Community Health Systems, Inc. has featured on Gallogly’s portfolio since the first quarter of 2020.
Community Health Systems, Inc. is one of the notable stock picks of Mark T. Gallogly’s Centerbridge Partners, just like Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN).
9. GDS Holdings Limited (NASDAQ:GDS)
Centerbridge Partners’ Stake Value: $11,353,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1%
Number of Hedge Fund Holders: 25
GDS Holdings Limited (NASDAQ:GDS) designs and manages data centres in the People’s Republic of China with its affiliates. As of the second quarter, Mark T. Gallogly’s Centerbridge Partners held an $11.35 million stake in GDS Holdings Limited, which accounted for 1% of the firm’s Q2 investment portfolio.
At the end of the second quarter of 2022, 25 hedge funds in the database of Insider Monkey reported owning stakes in GDS Holdings Limited, down from 26 funds in the previous quarter. The total value of these stakes is over $549.49 million. Joel Ramin’s 12 West Capital Management is the leading GDS Holdings Limited stakeholder, with 7.34 million shares valued at $244.96 million.
On August 26, GDS Holdings Limited was downgraded by RBC Capital analyst Jonathan Atkin to ‘Sector Perform’ from ‘Outperform’ with a $33 price objective, down from $41. Atkin claimed that his updated price prediction considered variables including a higher discount rate, elevated macroeconomic risk, Covid, and supply-chain elements.
Baron Funds, in its Q1 2022 investor letter, mentioned GDS Holdings Limited. Here is what the fund said:
GDS is the leading developer and operator of data centers in China. Following several years of strong share price performance, the shares of GDS corrected sharply in 2021 due to investor concerns about China’s increased regulatory scrutiny of the technology industry and a slowdown in its economy, increased competition, evidence of further tensions with U.S. regulatory agencies, and a substantial correction in technology shares broadly. At our average purchase price of $39, we believe these concerns are sufficiently discounted in the shares and remain optimistic about the company’s long-term potential to generate strong growth and increase the intrinsic value of the business.…. “(Click here to read the full text).”
8. VectoIQ Acquisition Corp. II (NASDAQ:VTIQ)
Centerbridge Partners’ Stake Value: $19,149,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1.69%
Number of Hedge Fund Holders: N/A
VectoIQ Acquisition Corp. II (NASDAQ:VTIQ) functions as a blank check company. Its goal is to complete a merger, stock exchange, asset acquisition, stock purchase, and restructuring. It was established on August 10, 2020. The company’s search efforts concentrate on the transportation, smart mobility, and industrial technology industries.
Steve Girsky, managing partner of VectoIQ Acquisition Corp. II, has over 30 years of experience working with top corporate and board executives, OEM leaders, labour leaders, suppliers and dealers, as well as federal, state, and municipal legislators.
VectoIQ Acquisition Corp. II stands eighth on the list of 10 stocks to buy according to Mark T. Gallogly’s Centerbridge Partners, with the hedge fund owning 1.95 million shares worth $19.15 million. Centerbridge Partners is VectoIQ Acquisition Corp. II’s most significant stakeholder.
7. GoHealth, Inc. (NASDAQ:GOCO)
Centerbridge Partners’ Stake Value: $24,324,000
Percentage of Centerbridge Partners’ 13F Portfolio: 2.15%
Number of Hedge Fund Holders: 9
GoHealth, Inc. (NASDAQ:GOCO) is a platform for health insurance that provides Medicare plans and health insurance brokerage to individuals and corporations. In the second quarter of 2022, 9 out of the 895 hedge funds tracked by Insider Monkey held a stake in GoHealth, Inc..
On August 26, Ben Hendrix of RBC Capital cut his price objective on GoHealth, Inc. from $2 to $1 while maintaining a ‘Sector Perform’ rating. GoHealth’s Q2 performance, a revised growth strategy that puts profitability ahead of quick expansion, the company’s revisions to its FY22 expectations, and the termination of 800 sales reps ahead of the Annual Enrollment Period were all noted by the analyst.
Centerbridge Partners is the most significant shareholder of GoHealth, Inc., with a stake worth $24.32 million as of the end of June 2022. Trailing Centerbridge Partners is D E Shaw, which amassed a stake valued at $2.28 million.
6. Garrett Motion Inc. (NASDAQ:GTX)
Centerbridge Partners’ Stake Value: $26,205,000
Percentage of Centerbridge Partners’ 13F Portfolio: 2.31%
Number of Hedge Fund Holders: 23
Finally, the sixth slot in Centerbridge’s 13F portfolio consisted of 3.39 million shares of Garrett Motion Inc. (NASDAQ:GTX), representing 2.31% of its portfolio. GTX is an auto parts company. Garrett Motion Inc. is working with a consultant on a potential sale while considering strategic options. Although no agreement is imminent, companies looking to enhance their electric car operations are expected to exhibit interest in Garrett.
Chuck Royce’s Royce & Associates is a prominent stakeholder of Garrett Motion Inc. as of September 30, increasing its stake in the company by 3% in Q3, holding 1.32 million shares worth almost $7.48 million.
By the end of the second quarter of 2022, Insider Monkey found Garrett Motion Inc. to be a part of 23 hedge fund portfolios. These funds’ total stakes in the firm are worth $2 billion, compared to $1.98 billion, with 20 positions in the previous quarter.
Apart from Garrett Motion Inc., Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN) are notable companies that captured Centerbridge Partners’ interest.
Here is what Alluvial Capital Management specifically said about Garrett Motion Inc. in its Q3 2022 investor letter:
“Garrett Motion Inc. has elected to begin paying cash dividends on its convertible preferred shares. Doing so prevents dividends in arrears from further accruing and is a wise use of the company’s free cash flow. I believe the choice to initiate a cash dividend is a tacit admission by the company that the necessary conditions for converting the preferred shares will not be met soon. This is a mild short-term negative, as the complex capital structure will remain in place for now. On the other hand, I am thrilled for us to earn a 9% yield as the company uses its free cash flow to buy back cheap stock and wait for the automotive cycle to turn.”
5. Genco Shipping & Trading Limited (NYSE:GNK)
Centerbridge Partners’ Stake Value: $88,188,000
Percentage of Centerbridge Partners’ 13F Portfolio: 7.79%
Number of Hedge Fund Holders: 16
Genco Shipping & Trading Limited, a 626.19 million market cap marine shipping company which transports dry bulk goods by ocean throughout the world, was another of Centerbridge Partners’ top picks. Genco Shipping & Trading Limited shares have returned 10.40% to investors over the course of the past twelve months as of November 8.
B. Riley analyst Liam Burke cautioned investors in a research note that the dry bulk market was suffering due to the uncertainty brought on by China lockdowns and the emergence of economic stimulus, and as a result, on October 10, the analyst maintained a ‘Buy’ rating on the shares while decreasing his price objective on Genco Shipping & Trading Limited to $27 from $31.
Centerbridge Partners added Genco Shipping & Trading Limited to its portfolio in the third quarter of 2016 by buying 2.28 million shares. In the second quarter of 2022, the hedge fund owned more than 4.56 million shares in Genco Shipping & Trading Limited worth $88.19 million. This represented 7.79% of the investment portfolio of Centerbridge Partners.
Genco Shipping & Trading Limited’s notable investor is Thomas Bailard’s Bailard Inc, with 17,000 shares worth $213,000. During the second quarter of 2022, a poll of 895 hedge funds conducted by Insider Monkey revealed that 16 had held a stake in Genco Shipping & Trading Limited, down from 19 in the preceding quarter.
4. INDUS Realty Trust, Inc. (NASDAQ:INDT)
Centerbridge Partners’ Stake Value: $89,778,000
Percentage of Centerbridge Partners’ 13F Portfolio: 7.93%
Number of Hedge Fund Holders: 9
INDUS Realty Trust, Inc. (NASDAQ:INDT) is a real estate business that develops, acquires, manages, and leases high-end industrial and logistical buildings. INDUS owns and operates 41 buildings totalling 4.6 million square feet, dispersed across more than 3,400 acres of undeveloped land in Connecticut, Pennsylvania, North Carolina, and Florida.
According to Insider Monkey’s data, INDUS Realty Trust, Inc. was part of 9 hedge fund portfolios at the end of Q2 2022, compared to 10 in the prior quarter. However, Centerbridge Partners elevated its stake in INDUS Realty Trust, Inc. by 12% in the second quarter of 2022. Mark Gallogly’s Centerbridge Partners owns 1.51 million shares of the company, worth over $89.78 million.
On October 17, BTIG analyst Thomas Catherwood retained a ‘Buy’ rating on the shares of INDUS Realty Trust, Inc. while trimming his price objective from $91 to $72. Despite strong fundamentals and a promising near-term outlook, the Industrial sector has lagged behind the entire industry after seven years of outperformance. On a multiple basis, the sector has not traded at these levels since Q1 of 2016, the analyst said in a research note to investors.
Here is what Clark Street Value has to say about INDUS Realty Trust, Inc. in its Q4 2021 investor letter:
“INDUS Realty Trust (INDT) will similarly just be in my tuck it away and forget about it pile for now, it is a logistics/warehouse REIT that has recruited much of the old Gramercy Property Trust (GPT) team, with the former CFO, Jon Clark, taking over at year end to round out things out. The tailwinds are pretty clear, and with a relatively small asset base and experienced team, they can be “sharp shooters” as they describe it, pick and choose smaller deals the likes of Blackstone can’t be bothered with to assemble a portfolio.”
3. Cedar Fair, L.P. (NYSE:FUN)
Centerbridge Partners’ Stake Value: $130,215,000
Percentage of Centerbridge Partners’ 13F Portfolio: 11.51%
Number of Hedge Fund Holders: 12
Cedar Fair, L.P. manages hotels, amusement parks, and indoor and outdoor water parks. Cedar Fair, L.P. owns and operates 13 facilities, including 11 theme parks, four independently guarded outdoor water parks, resort lodging with about 2,300 rooms, and more than 600 luxurious RV sites.
On November 2, Cedar Fair, L.P. published earnings for the third quarter of 2022, announcing earnings per share of $5.86, beating estimates by $2.00. In addition, the $362 million adjusted EBITDA for the period was up $29 million from the third quarter of 2021.
On November 3, B. Riley analyst Eric Wold maintained a ‘Buy’ recommendation on the shares while lowering his price objective for Cedar Fair, L.P. from $68 to $58. Wold advised investors in a research note that decreased attendance and larger post-pandemic labour limitations, which have not yet been fully leveraged, were the primary causes of Cedar Fair, L.P.’s adjusted EBITDA coming in severely below projections.
According to Insider Monkey’s Q2 data, 12 hedge funds were bullish on Cedar Fair, L.P., compared to the same number of funds in the earlier quarter. Centerbridge Partners held 2.97 million shares of Cedar Fair, L.P. as of the end of the second quarter of 2022, which are worth $130.22 million and represented 11.51% of its portfolio. It is the biggest stakeholder of the company.
2. Radius Global Infrastructure, Inc. (NASDAQ:RADI)
Centerbridge Partners’ Stake Value: $166,716,000
Percentage of Centerbridge Partners’ 13F Portfolio: 14.74%
Number of Hedge Fund Holders: 25
Radius Global Infrastructure, Inc. (NASDAQ:RADI) purchases and leases telecom real estate interests and contractual rights. As of December 31, 2021, Radius Global Infrastructure, Inc. had interests in 8,506 leases with 8,186 communications installations situated in the US and 19 other nations.
On October 4, Raymond James analyst Ric Prentiss reaffirmed a ‘Strong Buy’ recommendation on Radius Global Infrastructure, Inc. while trimming his price target from $21 to $17. Even with FX and interest rate fluctuations, Prentiss believed the share price decline was excessive, especially in light of Radius Global Infrastructure, Inc.’s integrated FX risk hedges.
According to Insider Monkey’s data, 25 hedge funds were long Radius Global Infrastructure, Inc. at the end of June 2022, up from 21 funds in the previous quarter. In addition, Travis Cocke’s Voss Capital is a significant position holder in the company, with 1.44 million shares worth $13.53 million.
Centerbridge Partners held 10.93 million shares in Radius Global Infrastructure, Inc. as of the second quarter of 2022. The hedge fund’s investment in the company accounted for 14.74% of its portfolio in the second quarter, up from 9.95% in the first quarter of 2022.
1. Garrett Motion Inc. (NASDAQ:GTXAP)
Centerbridge Partners’ Stake Value: $544,223,000
Percentage of Centerbridge Partners’ 13F Portfolio: 48.12%
Number of Hedge Fund Holders: 23
Garrett Motion Inc. (NASDAQ:GTXAP) and its subsidiaries develop, manufacture, and distribute turbocharger and electric-boosting technologies to original equipment manufacturers of light and commercial vehicles globally. Garrett Motion Inc. shares have offered investors 5.72% in returns over the course of the past twelve months.
Centerbridge Partners added Garrett Motion Inc. to its portfolio in the fourth quarter of 2021. In the second quarter of 2022, the hedge fund owned more than 66.21 million shares in the firm that are valued at over $544.22 million, representing 48.12% of the portfolio of the hedge fund.
Chuck Royce’s Royce & Associates held a substantial stake in Garrett Motion Inc. at the end of the third quarter of 2022, worth $7.48 million.
Alluvial Capital Management, an investment advisory firm, mentioned Garrett Motion Inc. in its Q3 2022 investor letter. Here is what the fund said:
“Garrett Motion Inc. has elected to begin paying cash dividends on its convertible preferred shares. Doing so prevents dividends in arrears from further accruing and is a wise use of the company’s free cash flow. I believe the choice to initiate a cash dividend is a tacit admission by the company that the necessary conditions for converting the preferred shares will not be met soon. This is a mild short-term negative, as the complex capital structure will remain in place for now. On the other hand, I am thrilled for us to earn a 9% yield as the company uses its free cash flow to buy back cheap stock and wait for the automotive cycle to turn.”
You can also take a peek at 8 Stocks to Buy According to Alexander Captain’s Cat Rock Capital and 10 Stocks to Buy According to James Morrow’s Callodine Capital Management
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This article is originally published at Insider Monkey.
