Quarterly 13F filings for the first quarter of 2016 have just started to flow in, so retail investors can start hunting down high-potential investment opportunities by examining the equity portfolios of various hedge fund vehicles. Selz Capital LLC, a New York-based investment manager founded and run by Bernard Selz, is one of the first hedge fund firms tracked by Insider Monkey to submit the 13F for the first quarter of 2016 with the U.S. Securities and Exchange Commission. The New York-based investment firm had an equity portfolio of $329.18 million on March 31, as compared to a market value of $346.02 million on December 31. Rather than analyze the fund’s top five positions at the end of the first quarter of this year, Insider Monkey decided to have a look at the most noteworthy moves made by Mr. Selz’s investment firm during the quarter. Precisely, the following article will discuss four new purchases made by Selz Capital, as well as one noteworthy sale that might be of interest for the investment community.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Lumber Liquidators Holdings Inc. (NYSE:LL)
– Number of shares held by Selz Capital LLC as of March 31: 336,000
– Value of Selz Capital’s holding as of March 31: $4.41 Million
Selz Capital LLC acquired a new stake of 336,000 shares in Lumber Liquidators Holdings Inc. (NYSE:LL) during the first quarter, which was valued at $4.41 million at the end of March. Lumber Liquidators Holdings is a specialty retailer of hardwood flooring in North America that sells a broad portfolio of exotic and domestic hardwood species, engineered hardwood, laminate, resilient vinyl, bamboo and cork. Earlier this month, the hardwood-flooring company won a tentative ruling in a Proposition 65 lawsuit in which several plaintiffs had accused the company of failing to adequately warn consumers in California that certain products emit formaldehyde, which is classified as a possible human carcinogen, in excess of state limits. Shares of Lumber Liquidators have gained 26% in the past month, but are down 52% in the past 12 months. The company’s net sales for 2015 were $978.78 million, which decreased from $1.05 billion in 2014. Allegedly, the decline in the company’s 2015 top-line figure was driven by allegations related to the product quality of its laminates sourced from China and the negative publicity surrounding those allegations. Meanwhile, Lumber Liquidators’ bottom-line figure was seriously impacted by legal and professional fees and settlement expenses related to various legal matters. The company registered a net loss of $56.4 million for 2015, as compared to net income of $63.4 million for 2014. Charles Paquelet’s Skylands Capital cut its stake in Lumber Liquidators Holdings Inc. (NYSE:LL) by 40% during the first quarter to 73,700 shares.
Nexstar Broadcasting Group Inc. (NASDAQ:NXST)
– Number of shares held by Selz Capital LLC as of March 31: 50,000
– Value of Selz Capital’s holding as of March 31: $2.21 Million
The New York-based investment firm also initiated a new stake of 50,000 shares worth $2.21 million in Nexstar Broadcasting Group Inc. (NASDAQ:NXST) during the first quarter. Nexstar Broadcasting Group operates as a television broadcasting and digital media company that focuses on acquiring, developing and operating television stations and interactive community websites in medium-sized markets in the United States. In January 2016, the company announced plans to acquire Media General Inc. (NYSE:MEG) for $10.55 per share in cash and 0.1249 of a Nexstar Class A share for each Media General share. Under the terms of the agreement, Media General shareholders are also set to receive an additional consideration in the form of a contingent value right (CVR) to net cash proceeds from any sale of the company’s spectrum assets, which could be worth up to $4.29 in after-tax value per share. Nexstar’s net revenue increased by $265.1 million, or 42% year-on-year, during 2015 to $896.4 million. The increase was mainly driven by new revenue from newly-acquired stations and entities, as well as an increase in retransmission compensation on the company’s legacy stations due to contract renewals. A decrease in advertising revenue, as 2015 was neither a political year, nor an Olympic year, put some pressure on the company’s 2015 top-line figure. Nexstar shares have lost 18% since the beginning of 2016 and trade at around 12.7-times expected earnings, significantly below the forward P/E ratio of 18.5 for the S&P 500 Index. Christian Leone’s Luxor Capital Group had 1.11 million shares of Nexstar Broadcasting Group Inc. (NASDAQ:NXST) in its equity portfolio at the end of 2015.
Wynn Resorts Limited (NASDAQ:WYNN)
– Number of shares held by Selz Capital LLC as of March 31: 15,000
– Value of Selz Capital’s holding as of March 31: $1.40 Million
Bernard Selz’s firm acquired a 15,000 share-stake in Wynn Resorts Limited (NASDAQ:WYNN) during the January-March quarter, which was valued at $1.40 million on March 31. Wynn Resorts operates as a developer, owner and operator of destination casino resorts that owns 72% of Wynn Macau Limited, which operates an integrated resort in Macau, and an integrated resort in Las Vegas, Nevada. Earlier this month, Wynn Resorts announced preliminary financial results for the first quarter of 2016, showing that Wynn Macau continues to struggle. Precisely, the company anticipates net revenue from the Macau operations in the range of $603 million to $613 million for the quarter, down from $705.4 million reported for the first quarter of 2015. Meanwhile, first-quarter net revenues from Las Vegas operations are anticipated to fall in the range of $384 million to $394 million, as compared to $386.9 million reported a year ago. Just recently, analysts at Deutsche Bank downgraded Wynn Resorts to ‘Hold’ from ‘Buy’ and cut the price target to $94 from $101, saying that the company might not be able to support a “meaningfully higher price target”. The downgrade is said to reflect the fundamentals of the Macau region, which has been registering lower volumes of visitors. Shares of Wynn Resorts are up 39% so far in 2016 and trade slightly above the price target set by Deutsche Bank. Murray Stahl’s Horizon Asset Management owns 157,309 shares of Wynn Resorts Limited (NASDAQ:WYNN) as of the end of the first quarter of 2016.
Helix Energy Solutions Group Inc. (NYSE:HLX)
– Number of shares held by Selz Capital LLC as of March 31: 100,000
– Value of Selz Capital’s holding as of March 31: $560,000
New York-based Selz Capital LLC added a new position of 100,000 shares of Helix Energy Solutions Group Inc. (NYSE:HLX) during the first quarter of this year, which was worth $560,000 at the end of March. Helix Energy Solutions is an international offshore energy services company that offers specialty services to the offshore energy industry, mostly focusing on well intervention and robotics operations. The company’s total net revenues for 2015 decreased to $695.80 million from $1.11 billion in 2014, mainly due to reduced opportunities for work and reduced rates. In mid-March, analysts at Morgan Stanley upgraded the company to ‘Overweight’ from ‘Equal Weight’, putting strong emphasis on the company’s well intervention; intervention engineering; production enhancement; inspection; repair and maintenance; and life of field support services. Well maintenance and repair services are less dependent upon energy companies’ discretionary capital spending, which can allow Helix Energy Solutions to easily survive a sustained low-crude-oil-price environment. Just recently, analysts at Credit Suisse also upgraded the offshore services company to ‘Outperform’ from ‘Neutral’. Helix Energy Solutions has seen its market value gain 25% year-to-date. Higher crude oil prices, several analyst upgrades, as well as better-than-expected bottom-line results have pushed Helix’s shares higher this year. Israel Englander’s Millennium Management was the largest equity holder of Helix Energy Solutions Group Inc. (NYSE:HLX) within our database at the end of 2015, holding 6.74 million shares.
Williams Partners LP (NYSE:WPZ)
– Number of shares held by Selz Capital LLC as of March 31: 0
– Value of Selz Capital’s holding as of March 31: $0
Selz Capital LLC owns no shares of Williams Partners LP (NYSE:WPZ) as of March 31, having unloaded 13,000 shares it held at the end of the previous quarter. Williams Partners is a limited partnership involved in the gathering, processing and interstate transportation of natural gas and natural gas liquids, as well as in the petchem production of ethylene, propylene and other olefins. In May 2015, Williams Partners and Williams Companies Inc. (NYSE:WMB) announced a merger agreement under which the latter was set to acquire the former at a 1.115 ratio of WMB share per WPZ common unit. However, Energy Transfer Equity LP (NYSE:ETE) sent a public offer to acquire Williams Companies for $64.00 per share, with the condition on terminating the previously-inked merger agreement with William Partners. As a result, William Partners announced plans to abandon the deal in late September 2015, with Williams Companies being required to pay a termination fee of $428 million, which were set to be paid through a reduction of quarterly incentive distributions. Williams Companies owns approximately 58% limited partnership interest in William Partners and all 2% general partner interest as of the end of 2015. Shares of Williams Partners are 8% in the red year-to-date and are down 49% in the past 12 months. David Tepper’s Appaloosa Management LP acquired a new stake of 2.37 million shares in Williams Partners LP (NYSE:WPZ) during the December quarter.