Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

First Bancorp (FBP), EXCO Resources Inc (XCO): What’s Oaktree Capital Buying?

At Insider Monkey, we track 500 of the world’s most elite hedge funds, and Howard Marks’ Oaktree Capital Management is one of the best of the best. Based in Los Angeles, Oaktree specializes in distressed debt, corporate debt and convertible securities, with an eye for contrarian, lesser-known investments. Because it can pay to watch hedge fund sentiment—discover why here—we’re going to take a look at Oaktree’s favorite picks heading into this quarter.

Number one


In Oaktree’s first quarter 13F filing with the SEC, its largest equity holding was in First Bancorp (NYSE:FBP) Puerto Rico, worth approximately $315.8 million. In Oaktree’s Q4 filing, the fund held the same number of shares in First Bancorp (NYSE:FBP) PR, but the stake was valued at $232.1 million. Up more than 34% year-to-date, shares of the bank holding company have benefited from above-average gross margins (89.0%) and solid revenue growth.

First Bancorp PR expects to come in this quarter with a $60+ million write-down related to Lehman Brothers, but shareholders are still optimistic on its ability to recover in Puerto Rico while expanding in Florida. At 5.6 times forward earnings and a book multiple below parity, there’s clear value here that Oaktree is betting on.


The second largest equity listed in the fund’s 13F portfolio is EXCO Resources Inc (NYSE:XCO), worth $262.2 million, up from $249 million reported at the end of last year. Up close to 19% since the start of 2013, EXCO Resources Inc (NYSE:XCO) has been another good investment for Oaktree, and the energy company’s latest earnings weren’t remarkable, but they were solid enough. Exco beat the Street’s estimates by five cents (EPS), and this is a play on higher natural gas prices in the future. Exco has a major presence in the shale gas arena, particularly in East Texas and North Louisiana.

Unlike some of its peers, which have been shedding assets, Exco has been building its resource base, establishing one key partnership with Harbinger earlier this year. At 22 times forward earnings, shares aren’t overwhelmingly cheap, but a dividend yield of 2.5% is enough to tide Oaktree over until higher LNG prices hit over the next few years.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.