Billionaire investor Howard Marks, famous for his investor memos, co-founded Oaktree Capital Management in 1995. The Los Angeles-based investment firm, which has $97 billion in assets under management as of March 31, mostly specializes in distressed-debt, high-yield bonds and value investing. Mr. Marks recently criticized the 2-and-20 fee structure applied by most hedge fund vehicles, saying that “nobody deserves 20 per cent carry unless they are exceptional. The one thing I know is that 40 years ago all hedge funds were run by geniuses, and there [were not many of them]”, said the billionaire investor back in 2015. But there are not 10,000 geniuses overseeing the fast-expanding hedge fund industry, according to Mr. Marks. While Marks is well-known for his famous letters, the performance of his stock picks has not disappointed either. With this in mind, let’s lay out a list of four new equity positions added to the portfolio of Oaktree Capital during the first quarter, as well as one massive position that was discarded.
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Snyder’s-Lance Inc. (NASDAQ:LNCE)
– Number of shares owned by Oaktree Capital (as of March 31): 1.22 Million
– Value of Oaktree Capital’s holding (as of March 31): $38.53 Million
Oaktree Capital Management added a stake of 1.22 million shares of Snyder’s-Lance Inc. (NASDAQ:LNCE) to its portfolio during the first quarter of 2016, which was valued at $38.53 million on March 31. The new stake accounted for 0.7% of the fund’s $5.57 billion portfolio at the end of March. In late February, the snack food company completed the acquisition of industry peer Diamond Foods, which had five brands under its umbrella: Kettle Brand potato chips, KETTLE Chips, Pop Secret popcorn, Emerald snack nuts and Diamond of California culinary nuts. Diamond shareholders received 0.775 shares of Snyder’s Lance and $12.50 in cash for each share of Diamond Foods, with the total purchase price amounting to $1.86 billion. As a result, the acquirer’s net revenue for the three months that ended April 2 increased by 15.0% year-over-year to $462.77 million. Snyder’s Lance shares are down by 13% year-to-date. Jim Simons’ Renaissance Technologies owns 511,231 shares of Snyder’s-Lance Inc. (NASDAQ:LNCE) as of March 31.
Yahoo! Inc. (NASDAQ:YHOO)
– Number of shares owned by Oaktree Capital (as of March 31): 423,626
– Value of Oaktree Capital’s holding (as of March 31): $15.59 Million
The Los Angeles-based investment firm added a 423,626-share position in Yahoo! Inc. (NASDAQ:YHOO) to its portfolio during the March quarter, which was worth $15.59 million on March 31. It is widely-known that the struggling Internet company has formed a strategic review committee to examine strategic alternatives, including a possible sale or a reverse spin-off of Yahoo’s operating business. Various buyers have been participating in a bidding war for Yahoo’s Web business, which was previously said to be worth $4 billion-to-$8 billion. According to a fresh news story posted by the Wall Street Journal, Verizon Communications Inc. (NYSE:VZ) and other players interested in Yahoo’s core business are anticipated to bid approximately $2 billion-t0-$3 billion in the ongoing auction, which is significantly less than most analysts and investors had anticipated. Thus, Yahoo’s management and activist Jeffrey Smith of Starboard Value LP, who pressured the company to put its core business up for sale, could abandon the sale should the final round of bids disappoint. Yahoo shares are up by 11% since the start of the year. Starboard Value LP reported owning 12.30 million shares of Yahoo! Inc. (NASDAQ:YHOO) through the latest round of 13F filings.
On the next page, we’ll take a look at two other additions to, and a subtraction from, Mr. Marks’ portfolio in the first quarter.