Bernard Selz is the manager of Selz Capital LLC, a New York-based hedge fund founded in 2003. Selz holds a degree from Columbia University and has over 45 years of experience in the investment business. He previously worked with companies like Lazard Freres and Furman Selz before establishing Selz Capital.
Mr. Selz’s fund invests in publicly-traded securities globally and has a public equity portfolio worth more than $429 million as of September 30, up from less than $352 million on June 30. The fund invests primarily in three sectors: energy, transportation, and consumer discretionary, stocks from which account for 27%, 21%, and 16% of the value of the fund’s portfolio respectively. Macquarie Infrastructure Corp (NYSE:MIC) continues to rank as the fund’s most valuable holding as of September 30, accounting for 19.61% of its portfolio’s value.
Selz Capital has 51 holdings as of the end of September, which includes nine positions initiated during the third quarter. In this article we’ll take a look at five of those new additions to Selz Capital’s portfolio during the period.
Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details).
Let’s start with Liberty Global plc (NASDAQ:LBTYA), a leading international broadband and television company with more than 28 million customers in which Selz Capital added 50,000 shares of to its portfolio during the September quarter. The company operates in more than 30 countries and has been increasing its global footprint through acquisitions. In May, Liberty Global completed the acquisition of Cable & Wireless Communications Plc, to increase its presence in Latin America and the Caribbean. It also recently announced that it was acquiring Multimedia Polska, which is the third-largest cable operator in Poland. Liberty Global plc (NASDAQ:LBTYA) also recently entered into a content partnership with Netflix Inc. (NASDAQ:NFLX), which Mott Capital called “a game changer” in its latest investor letter. Nonetheless, shares of Liberty Global plc (NASDAQ:LBTYA) have declined by more than 21% this year, greatly under-performing the broader Nasdaq market. The value of hedge funds’ holdings in the stock declined by more than 23% to $1.58 billion as of June 30, among the 51 hedge funds in our database which owned the stock.
Selz Capital acquired 310,000 shares of MDC Partners Inc (NASDAQ:MDCA) in the third quarter, adding the advertising and communications company to its portfolio. MDC Partners Inc (NASDAQ:MDCA) lowered its full-year revenue guidance to $1.39 billion-to-$1.42 billion earlier this year from $1.41 billion-to-$1.44 billion after its financial results for the second quarter were below expectations. However, the company believes that it will showcase growth in the second-half of this year; it’s slated to release its third quarter figures on Thursday. Though the company has been increasing its revenue over the last ten years, it has failed to record a profit in any of those years. The company was recently cited in a tweet by Gotham City Research as one which could fit the bill as a company misusing adjusted earnings metrics. The Wall Street Journal reported that several companies have been contacted by the SEC recently regarding their reporting of non-GAAP results, though specific companies weren’t mentioned. 18 hedge funds in our system held 27% of MDC Partners Inc (NASDAQ:MDCA)’s outstanding stock at the end of June, with their holdings valued at $249 million.
We’ll discuss three more new stock picks of Bernard Selz and his team on the next page.