Michael Thompson’s BHR Capital has submitted its 13F with the U.S. Securities and Exchange Commission for the quarterly period ended March 31. The firm had a public equity portfolio value of $877.68 million at that time, a decrease from the $1.05 billion it contained at the end of 2014. According to the filing, the firm had stakes mainly in finance, energy, and transportation stocks, with public equity exposure of over 90% to those three industries. BHR Capital mainly utilizes a value-oriented investment strategy, targeting event-driven investment openings that include special situations and taking advantage of specific catalysts with the aim of unlocking value in a stock. The New York City-based hedge fund was founded in 2009 and is currently headed by Thompson. When we look at the fund’s top small-cap picks for the quarter, we see that Thompson continues to bet heavily on a rebound in the oil tanker industry, which has been hit particularly hard by the depressed oil prices that have crippled the shares of the many stocks in the energy industry. Thompson’s top small-cap picks, which we’ll study in this article, are Golar LNG Limited (USA) (NASDAQ:GLNG), Gramercy Property Trust Inc (NYSE:GPT), and Scorpio Tankers Inc. (NYSE:STNG).
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Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 142% over the last 33 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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The latest revealed that Thompson has upped his stake to 3.94 million shares of Golar LNG Limited (USA) (NASDAQ:GLNG), which have a market value of $131.03 million as of March 31. The small-cap stock is also Thompson’s top overall stock pick. While still down 4% over the past year, Thompson did well to remain bullish on the stock, which has had a big second quarter, lifting its year-to-date returns to 29%. Golar CEO Gary Smith revealed that they would be developing two or more projects with Rosneft, with the projects targeting Sakhalin and Venezuela. Golar LNG Limited (USA) (NASDAQ:GLNG) earned a total of $390 million from the sale of Eskimo to LNG Partners. It also generated a total of $207 million from the sale of 7.17 million Partners common units. The liquefied gas shipping company announced a dividend of $0.45 per share payable on June 26, representing a yield of 3.79%. The ex-dividend date is today. In terms of earnings per share for the first quarter, the company recorded a loss of $0.14, which missed analysts’ consensus estimate by $0.07. Nonetheless, the stock currently has an average recommendation of “Buy” and a price target of $56.29, suggesting remaining upside potential of nearly 20%. Out of the 730 actively reporting hedge funds that we currently monitor, a total of 35 had long positions in the stock. These included Christopher Pucillo‘s Solus Alternative Asset Management, Christopher A. Winham’s Tide Point Capital, and Malcolm Fairbairn’s Ascend Capital.
At the end of the first quarter, Thompson held a total of 2.07 million shares of Gramercy Property Trust Inc (NYSE:GPT) valued at $58.25 million. That was a dip from the previous 13F reporting period, when the fund held 2.30 million shares of the real estate investment trust (REIT). Gramercy recently received an investment-grade credit rating from Moody’s, which is a notable milestone within its net-lease REIT sector and in the stock market in general. Two firms that recently covered the stock gave it a recommendation of “Strong Buy.” Gramercy Property Trust Inc (NYSE:GPT) beat Thomson Reuters’ earnings per share estimate for the first quarter, posting $0.43, a beat of $0.03. Gramercy today announced the closure of its purchase of two adjacent, single-tenant industrial properties in Orlando, Florida, for $15.5 million. Shares are up by 1.5% today on the news of the purchases, which are expected to deliver year one operating income of $1.4 million. Billionaire Ken Griffin‘s Citadel Advisors holds 2.66 million shares of Gramercy, more than any other fund we track.
Lastly, BHR Capital’s filing showed that it held a total of 4.74 million shares of Scorpio Tankers Inc. (NYSE:STNG) with a market value of $44.60 million, representing a slight increase in the fund’s position in the stock compared to the previous quarter, when it held a total of 4.54 million shares. Scorpio Tankers has already begun to rebound from its 14% drop in the second half of 2014, gaining 12% year-to-date. Insider Monkey looked into the performance of the stock and why it has generated great interest among investors and analysts. One of the reasons why the company, which operates within the services industry, has generated a lot of interest is its growth potential. Analysts have an estimated 5-year growth prospect of 25.05% and a price-to-earnings growth multiple of 1.14, meaning that the stock has been fairly priced. Out of nine brokerages, five have given the stock a rating of “Strong Buy”. Scorpio Tankers Inc. (NYSE:STNG) recently announced a $250 million buyback project in which it’s set to re-purchase its common stock and bonds, consisting of Convertible Senior Notes, and Unsecured Senior Notes. 29 of the hedge funds in our database were invested in Scorpio Tankers Inc. (NYSE:STNG), including five billionaires. The hedge funds held a total of $592.65 million of the company’s stock on March 31. A few of these hedge funds are Michael Weinstock’s Monarch Alternative Capital which held a total of 6.30 million shares, Remy Trafelet’s Trafelet Capital, which held 1.67 million shares, and billionaire Marc Lasry‘s Avenue Capital, which held 6.41 million shares.
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