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Billionaire Howard Marks’ Top Stock Picks For 2016

Oaktree Capital Management is a Los Angeles-based hedge fund founded by Howard Marks and a few other TCW Group former employees in 1995. The firm specializes in alternative investments and focuses on distressed debt, corporate debt and convertible securities. Oaktree had roughly $100 billion in assets under management as of September 30, 2015, and its equity portfolio was worth more than $7.57 billion as of the end of the year. Although the portfolio is quite diversified, it does have a penchant for real estate and tech stocks. According to our data, Oaktree held positions in 36 companies with market caps above $1.0 billion and these holdings posted a weighted average loss of 14% last year. In this article we will take a look at the fund’s top picks as of December 31, 2015.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that imitating a portfolio of the 15 most popular small-cap stocks among hedge funds can outperform the S&P 500 Index by nearly one percentage point per month over the long run (read the details here).

Store Capital Corp (NYSE:STOR)

– Shares Owned by Oaktree as of December 31: 70.33 Million

– Value of Holding as of December 31: $ 1.63 Billion

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Same as in the third quarter, Store Capital Corp (NYSE:STOR) was the largest stake in Oaktree’s equity portfolio at the end of December, even though the fund trimmed its stake by 2% over the quarter. This position makes the firm one of the largest shareholders of the company, trailed by Jeffrey Furber’s AEW Capital Management, which boosted its exposure to the stock by 23% over the fourth quarter to 2.18 million shares. It should also be noted that, a few weeks ago, an investor affiliated with Oaktree decided to commence a secondary offering of 10.5 million shares of Store Capital Corp (NYSE:STOR)’s common stock – from which the company will receive no proceeds.

Tribune Media Co (NYSE:TRCO)

– Shares Owned by Oaktree as of December 31: 14.14 Million

– Value of Holding as of December 31: $ 478.25 Million

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Also maintaining the same spot as in the previous quarter was Tribune Media Co (NYSE:TRCO), Oaktree’s second-largest stake, which accounted for 6.6% of its fourth quarter equity portfolio value. A few days ago, however, the fund disclosed an increase in its stake to 14.17 million shares. Another investor bullish on the small-cap media company was Mason Hawkins’ Southeastern Asset Management, which declared holding 4.08 million shares as of December 31, same as in the previous quarter. For the third quarter, Tribune Media Co (NYSE:TRCO) disclosed earnings of $0.29 per share, $0.02 above consensus estimates, on revenue of $488.59 million, which fell short of expectations for $491.35 million in sales. For the last three months of 2015, analysts expect Tribune Media to report EPS of $0.55 on revenue of $543.07 million.

On the next page we will take a look at Oaktree’s stakes in Diamond Foods, Inc. (NASDAQ:DMND), Ally Financial Inc (NYSE:ALLY) and First Bancorp (NYSE:FBP).

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