Did Altalis Capital Partners Make The Right Move Cutting Exposure To News Corp (NWSA), DISH Network Corp (DISH) & Two Other Stocks?

A value-oriented long/short equity fund with approximately $431 million in assets under management as of April 2016, Altalis Capital Partners is run by Adam Fox and Samuel Elder, who both worked for Frank Brosens’ Taconic Capital, as well as Goldman Sachs Capital Partners prior to launching Altalis. The fund’s equity portfolio carried a market value of $92.2 million at the end of the third quarter and had significant exposure to consumer discretionary stocks, which accounted for roughly half of the portfolio. During the quarter, the fund’s management reduced its holdings in 16 stocks and initiated 4 new positions. In this article we’ll take a look at some of its top picks and how the fund adjusted them heading into the fourth quarter.

Insider Monkey evaluates the performance of a hedge fund by looking at its stock picks that have a market cap larger than $1 billion. According to this metric, Altalis Capital Partners registered a positive return of 15% from 15 positions that qualify under those guidelines. That put the fund into the top-75 best performing hedge funds for the third quarter, among the funds followed by Insider Monkey.

First up is News Corp (NASDAQ:NWSA), Altalis Capital’s top equity bet for the third quarter. According to the fund’s latest 13F filing, Fox and Elder have dumped roughly 72% of its holding, reducing it to 688,905 shares worth $9.63 million at the end of September. The stock returned 24.1% during the third quarter.

At Q2’s end, 35 of the hedge funds within Insider Monkey’s database held long positions in this stock, up by 3% from the previous quarter. More specifically, Pzena Investment Management was the largest shareholder of News Corp (NASDAQ:NWSA), with a stake worth $305.4 million reported as of the end of June. Trailing Pzena Investment Management was International Value Advisers, which amassed a stake valued at $229.3 million. Blue Mountain Capital, AQR Capital Management, and Highfields Capital Management were also long the stock.

Valued at $24.9 million, Altalis Capital Partners’ stake in Echostar Corporation (NASDAQ:SATS) was reduced by 8% during the third quarter to 569,260 shares. However, due to the big reduction in the fund’s holding of News Corp, Echostar is now its largest equity position. Shares of the company gained 10.4% during the third quarter.

At Q2’s end, Altalis was one of 23 hedge funds tracked by Insider Monkey which held long positions in this stock, an increase of 5% from the previous quarter. According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’ Renaissance Technologies has the largest position in Echostar Corporation (NASDAQ:SATS), worth close to $87.7 million. Sitting at the No. 2 spot is Kensico Capital, led by Michael Lowenstein, holding a $58.8 million position. Other professional money managers with similar optimism consist of Nathaniel August’s Mangrove Partners and Murray Stahl’s Horizon Asset Management.

We’ll check out two more of the fund’s stock picks on the next page.

Although they have not yet given up on DISH Network Corp. (NASDAQ:DISH), Fox and Elder slightly decreased their fund’s exposure to the stock in Q3. According to its latest 13F filing, Altalis Capital Partners held 133,430 shares of the satellite TV company, a position valued at $7.31 million at the end of the third quarter. The stock returned 4.5% during that quarter.

At the end of the second quarter, a total of 52 of the hedge funds that we follow were long this stock, a slight increase of 2% from the first quarter of 2016. More specifically, Eagle Capital Management was the largest shareholder of DISH Network Corp. (NASDAQ:DISH), with a stake worth $918.5 million reported as of the end of June. Trailing Eagle Capital Management was Tourbillon Capital Partners, which amassed a stake valued at $193.6 million. GAMCO Investors and York Capital Management also held valuable positions in the company.

After a woeful performance, Houghton Mifflin Harcourt Co (NASDAQ:HMHC) fell out of favor with the management of Altalis Capital Partners. Over the course of the third quarter, the fund’s stake was slashed by 34% to 74,562 shares worth $1 million at the end of September. The stock continued its slide, falling 14.2% during the third quarter.

Heading into the third quarter of 2016, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, up by 9% from the previous quarter. When looking at the institutional investors followed by Insider Monkey, Kevin Michael Ulrich and Anthony Davis’ Anchorage Advisors has the number one position in Houghton Mifflin Harcourt Co (NASDAQ:HMHC), worth close to $314 million, comprising 7.5% of its total 13F portfolio. The second most bullish fund manager is Glenhill Advisors, led by Glenn J. Krevlin, holding a $123 million position. Some other professional money managers with similar optimism comprise Gilchrist Berg’s Water Street Capital, Marc Lasry’s Avenue Capital, and Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC.

Disclosure: None