This article discusses the top 7 stocks that Stephen Feinberg’s Cerberus Capital Management held at the end of the first quarter and the fund’s history.
Cerberus Capital Management is a name to reckon with in the private equity industry. Founded in 1992 by billionaire Stephen Feinberg and William L. Richter, who currently serves as the firm’s senior managing director, Cerberus Capital Management is headquartered in New York City. According to Cerberus’ latest Form ADV, the firm manages assets worth over $80 billion, of which $6 billion is invested in publicly traded companies according to the firm’s latest 13F filing.
Steve Feinberg started Cerberus Capital Management with only $10 million in AUM in 1992. At that time, Feinberg, aged 32, had already made a name for himself on Wall Street, having spent ten years working for Drexel Burnham and later at Gruntal & Co. The firm initially focused on distressed investing but has expanded its horizon to lending, specialty finance, real estate investment, and securities trading since then. Cerberus Capital Management currently employs over 785 professionals across 23 offices worldwide. Moreover, as a testament to the firm’s size, Cerberus currently has 80 managing directors and senior leaders who have been with the firm for over a decade.
Cerberus Capital Management has historically invested most of the assets it manages in the private markets. Nevertheless, the firm has been increasing the size of its public portfolio in the last few quarters. As reported by the firm in its previous 13F filings, the value of Cerberus’ holdings in the public markets increased to $6.3 billion on March 31, 2022 compared to $3.5 billion at the end of 2020.
In this article, we are going to take a look at Cerberus’ top 7 publicly trading holdings at the end of the first quarter of 2022, which include names like Albertsons Companies, Inc. (NYSE:ACI), Deutsche Bank Ag (NYSE:DB) and Frontier Communications Parent, Inc. (NYSE:FYBR).
Stephen Feinberg of Cerberus Capital Management
Our Methodology
The top seven stocks we selected from Cerberus Capital Management’s portfolio were the stocks the firm disclosed in its 13F filing for the quarter ending March 31, 2022. At Insider Monkey, we track the portfolios of 912 hedge funds, and under each stock that we’ll discuss in this article, you will be able to see the number of hedge funds that held that stock at the end of the first quarter as per our database.
Top 7 Stocks to Buy Today According to Stephen Feinberg’s Cerberus Capital Management
7. Zeta Global Holdings Corp. (NYSE:ZETA)
Cerberus Capital Management’s Stake Value: $2,787,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 20
Zeta Global Holdings Corp. operates a cloud-based platform that provides enterprises with consumer intelligence and marketing automation software. The company went public last year in June, raising $215 million at a $10 per share valuation. Since going public, Zeta Global Holdings Corp.’s stock has fallen by more than 40% and currently trades at close to $5.5.
For its most recent quarter ending March 31, 2022, Zeta Global Holdings Corp. reported a loss of $0.54 per share, which was $0.11 more than what analysts were expecting. In addition, the company reported revenues of $126.27 million for the same period, which beat analysts’ expectations by $6.41 million. Zeta Global Holdings Corp.
Zeta Global Holdings Corp. potential competitors in the ad tech space include marquee names like Alphabet Inc. (NASDAQ:GOOG) and Meta Platforms, Inc. (NASDAQ:META). Although the company reported quarter-over-quarter revenue growth in every quarter of its fiscal year 2021, during the first quarter of 2022, Zeta Global Holdings Corp.’s revenue was lower than what the company reported for the fourth quarter of 2021.
6. Consolidated Communications Holdings, Inc. (NASDAQ:CNSL)
Cerberus Capital Management’s Stake Value: $7,552,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 0.11%
Number of Hedge Fund Holders: 9
Consolidated Communications Holdings, Inc. was a new entrant in Cerberus Capital Management’s 13F portfolio. The fund has mostly run a concentrated equity portfolio with names like Albertsons Companies, Inc., Deutsche Bank Aktiengesellschaft, and NexTier Oilfield Solutions Inc. (NYSE:NEX) being amongst its top picks for more than a year. Cerberus Capital Management held close to 1.28 million shares of Consolidated Communications Holdings, Inc. at the end of the first quarter, but that holding accounted for only 0.11% of the total value of Cerberus’s 13F portfolio.
Consolidated Communications Holdings, Inc. is a small-cap company that, through its subsidiaries, provides broadband and business communication solutions in the US. Like most companies in the telecommunication sector, Consolidated Communications Holdings, Inc. has had a lot of debt on its balance sheet.
5. Altice USA, Inc. (NYSE:ATUS)
Cerberus Capital Management’s Stake Value: $10,865,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 0.17%
Number of Hedge Fund Holders: 40
Cerberus Capital Management increased its stake in Altice USA, Inc. by 68% to 870,607 shares during the first quarter of 2022. The fund had reported Altice USA, Inc. as part of its 13F holdings for the first time in the third quarter of 2022. Since then, Cerberus has been increasing its holdings in the company every quarter.
Like Consolidated Communications Holdings, Inc., Altice USA, Inc. is also a broadband provider. However, besides providing broadband communications and video services in the United States, the company also caters to customers in Canada, Puerto Rico, and the Virgin Islands.
Altice USA, Inc.’s stock has steadily declined over the last year, losing two-thirds of its value during that period. Analysts covering the stock also don’t seem excited about its prospects in the near term. On July 12, analysts at Morgan Stanley reduced their price target on the stock to $12 from $13 while maintaining their ‘Equal Weight’ rating. Nearly a week later, on July 19, Deutsche Bank’s analysts also lowered their target price on Altice USA, Inc.’s stock to $13 from $14.
4. NexTier Oilfield Solutions Inc. (NYSE:NEX)
Cerberus Capital Management’s Stake Value: $292,793,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 4.64%
Number of Hedge Fund Holders: 29
NexTier Oilfield Solutions Inc. has been one of the biggest beneficiaries of the oil price boom that we have seen in the past two years. Shares of NexTier Oilfield Solutions Inc. were languishing below $2 levels during most of the second half of 2020. However, they have jumped over 300% since then and currently trade close to $9.
Cerberus Capital Management seems to have made significant gains on its holdings in NexTier Oilfield Solutions Inc.. The fund had over 40 million shares of the company at the end of 2020, which it reduced to 33.35 million shares during the first quarter of 2021. Since then, Cerberus has held the same number of shares in NexTier Oilfield Solutions Inc..
Although most analysts on Wall Street remain bullish on this service provider to oil and gas companies, some of them reduced their price target on NexTier Oilfield Solutions Inc.’s stocks in the last few days. These include analysts at Morgan Stanley and Bank of America, who reduced their price target to $12 from $12.5 and to $9.5 from $12.5, respectively, in July.
3. Deutsche Bank Aktiengesellschaft (NYSE:DB)
Cerberus Capital Management’s Stake Value: $331,637,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 5.26%
Number of Hedge Fund Holders: 15
Cerberus Capital Management reduced its stake in the commercial and investment banking giant Deutsche Bank Aktiengesellschaft by 59% to a little over 26 million shares during the first quarter.
Shares of Deutsche Bank Aktiengesellschaft have never fully recovered from the plunge they took amidst the financial crisis in 2008. Before the financial crisis, Deutsche Bank Aktiengesellschaft’s stock made an all-time high above $150, and during the crisis, it tanked to $20 levels. Although it recovered close to $80 soon on the back of the recovery post the financial crisis, it has been on a consistent downward trajectory since then. A major part of the losses that investors have suffered in the stock can be attributed to mismanagement by the bank’s top executives.
Earlier this year, in June, Asoka Woehrmann, the ex-CEO of Deutsche Bank Aktiengesellschaft’s DWS group, resigned as the CEO after authorities in Germany raided its Frankfurt offices. The raid happened over allegations that the bank’s asset management business was engaging in greenwashing, i.e., fudging numbers to support its ESG claims in an effort to mislead investors.
2. Frontier Communications Parent, Inc. (NASDAQ:FYBR)
Cerberus Capital Management’s Stake Value: $607,586,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 9.64%
Number of Hedge Fund Holders: 48
Frontier Communications Parent, Inc., once a telecommunication giant, filed for bankruptcy in April 2020. The existing shareholders of the company at the time got wiped out. However, after emerging from bankruptcy, Frontier Communications Parent, Inc. went public again in May last year, getting listed at $30 per share.
Cerberus Capital Management reported its stake in the company in its second quarter 2021 13F filing, which means the firm has been invested in the stock almost since Frontier Communications Parent, Inc. went public again. Since reporting its stake then, Cerberus has increased its shareholding in the company a little in the next few quarters to around 22 million shares at the end of March 2022.
Analysts’ outlook for the company has remained mixed in the past few months. On July 7, Citi analyst, Michael Rollins, published a report in which he advised clients to do a pair trade by selling the stock of Consolidated Communications Holdings, Inc. and buying the shares of Frontier Communications Parent, Inc.. Rollins thinks that Frontier has room to improve its operations going into 2023, which can lead its stock to outperform over the stock of Consolidated Communications Holdings, Inc.. In addition, analysts at The Goldman Sachs Group reiterated their ‘Buy’ rating on Frontier Communications Parent, Inc.’s stock but reduced their price target to $39 from $45 on July 12.
1. Albertsons Companies, Inc. (NYSE:ACI)
Cerberus Capital Management’s Stake Value: $5,047,971,000
Percentage of Cerberus Capital Management’s 13F Portfolio: 80.11%
Number of Hedge Fund Holders: 40
Albertsons Companies, Inc. has remained Cerberus Capital Management’s top public holding ever since the fund first disclosed its position in the company in its 13F filing for the second quarter of 2020. Cerberus Capital Management had held a stake in Albertsons Companies, Inc. under its private equity funds before the company became a publicly traded corporation.
Albertsons Companies, Inc. started trading publicly in June 2020 after raising $1.25 billion from investors in its IPO. Albertsons Companies, Inc. runs multiple grocery stores under various brand names, mainly in the northeastern and western regions of the US. In addition, it also operates many food-related and grocery companies that sell their products primarily through offline channels. Vivek Sankaran is the current President and CEO of Albertsons Companies, Inc.. Before joining Albertsons Companies, Inc., Mr. Sankaran was the CEO of PepsiCo Foods North America and Frito-Lay.
At the end of the first quarter of 2022, 39 of the 912 hedge funds we track had a long position in Albertsons Companies, Inc., up from 29 funds in the previous quarter.
You can also look at the 6 Favorite Stock Picks of Munir Javeri’s 3G Sahana Capital Management and Billionaire Daniel Sundheim’s D1 Capital Portfolio: Top 10 Stock Picks.
Follow Insider Monkey on Twitter
Suggested articles:
10 Best Stocks to Buy Now According to Billionaire Marc Lasry’s Avenue Capital
10 Stocks to Buy Now According to David Einhorn’s Greenlight Capital
7 Best Energy Stocks to Buy Now According to Billionaire Leon Cooperman
originally published on Insider Monkey.
