According to a recent filing with the Securities and Exchange Commission, Kevin Michael Ulrich (pictured) and Anthony Davis’ Anchorage Capital has entered into an underwriting agreement with Central Pacific Financial Corp. (NYSE:CPF), Citigroup Global Markets Inc. and Carlyle Financial Services Harbor LP, whereby Anchorage and Carlyle will each sell 1.5 million shares of Central Pacific of the total 3.0 million already agreed upon by the entities, at a price of $22.15 per share. Anchorage reduced its stake in Central Pacific Financial Corp. (NYSE:CPF) by 47% during the first three months of the year to 4.27 million shares valued at $98.06 million, and its ownership had not changed since then according to the latest filing, and represents 13.5% of the company’s outstanding stock.
Established in 2003, Anchorage is one of the largest distressed credit hedge funds. Its co-founder Anthony Davis, a former Goldman Sachs banker is scheduled to retire in September this year, but will remain a senior adviser and a large investor of the fund. The long/short New York-based fund focuses on the company’s fundamentals as part of its investment strategy in equities. Currently, Anchorage has nearly $21.6 billion in assets under management and the market value of its public equity portfolio stood at $3.58 billion at the end of the first quarter, with the finance sector contributing 34% of that value. Anchorage’s top equity holdings at the end of March included Houghton Mifflin Harcourt Co (NASDAQ:HMHC), Cheniere Energy, Inc. (NYSEMKT:LNG), and Nortek Inc (NASDAQ:NTK), which we’ll look at later in the article.
As far as the importance of tracking hedge funds is concerned, we discovered through our research that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. In forward tests since August 2012 through March 2015 the top 15 small-cap stocks beat the market by a hefty 84 percentage points, returning over 144% (read the details here). Hence a retail investor needs to isolate himself from the herd of investors chasing large-cap stocks and take advantage of the prevalent arbitrage opportunities in the market by concentrating on these money-making small-cap stocks.
The stock price of the $705.50 million bank holding company Central Pacific Financial Corp. (NYSE:CPF) has appreciated by nearly 16% over the last year. Among the hedge funds that we track, the interest in Central Pacific Financial Corp. (NYSE:CPF) has increased in terms of total fund ownership, as 11 firms had invested a total of $145.58 million in the company at the end of March as compared to eight funds with $215.50 million invested at the end of the previous quarter. Ken Griffin‘s renowned managed futures fund, Citadel Investment Group is another prominent stockholder of Central Pacific Financial Corp. (NYSE:CPF) with 531,900 shares valued at $12.22 million.