Glendon Capital Management, Led By Several Ex-Barclays Members, Reveals Top Stock Picks for Q3

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Glendon Capital Management L.P. was launched in April 2013 by Matthew Barrett, the former head of distressed debt and special situations investing at Barclays, as well as former Barclays Asset Management Group managing directors Holly Kim, Brian Berman and Eitan Melamed. The California-based asset manager, which reportedly wrapped up its $1 billion-debut fund in late 2014, predominantly invests in distressed securities and employs an event-driven investment approach.

Glendon Capital primarily seeks to invest in stressed and distressed company securities, post-reorganization securities, downgraded securities, tax-exempt bonds, asset-backed securities, as well as special situations such as company liquidations and rescue financing. Prior to joining Barclays, Mr. Barrett, Mr. Berman and Ms. Kim had also worked at Howard Marks‘ Oaktree Capital Management, as managing directors of its distressed debt platform. Distressed debt specialist Glendon Capital oversees a $314.44 million-portfolio as of the end of the second quarter, up from a value of $238.27 million in holdings at the end of the first quarter. With that in mind, let’s have a look at Glendon Capital’s five-largest equity holdings as of the end of June.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).


#5. American International Group Inc. (NYSE:AIG)

 – Shares Owned by Glendon Capital Management (as of June 30): 181,500

 – Value of Glendon Capital Management’s Holding (as of June 30): $9.60 Million

Glendon Capital Management did not make any changes to its 181,500-share stake in American International Group Inc. (NYSE:AIG) during the second quarter. The shares of the U.S. insurer surged earlier this week after the company released better than expected earnings for the second quarter and announced plans to repurchase an additional $3.0 billion worth of AIG stock. AIG laid out a game plan in late-January to create a leaner, more profitable and focused company after well-known activists Carl Icahn and John Paulson demanded AIG split itself into three separate companies. AIG’s second quarter net income increased to $1.9 billion from $1.8 billion reported a year earlier, as the insurance giant continues to shrink its business operations and enhance efficiency. AIG shares are 6% in the red thus far in 2016. Stephen J. Errico’s Locust Wood Capital Advisors owns 582,522 shares of American International Group Inc. (NYSE:AIG) as of the end of the second quarter.

Follow American International Group Inc. (NYSE:AIG)

#4. Atlantica Yield PLC (NASDAQ:ABY)

 – Shares Owned by Glendon Capital Management (as of June 30): 985,535

 – Value of Glendon Capital Management’s Holding (as of June 30): $18.31 Million

The distressed debt specialist upped its position in Atlantica Yield PLC (NASDAQ:ABY) by 11% during the three-month period ending June 30, to 985,535 shares valued at $18.31 million on June 30. The Spanish renewable energy company that owns, manages and acquires renewable energy, conventional power, electric transmission lines, and water revenue-generating assets has recently been engaged in debt talks with its creditors to avoid becoming Spain’s largest bankruptcy ever. In late-March, Reuters reported that Atlantica Yield managed to win the backing of approximately 75% of its creditors to restructure its $10.5 billion debt load, with the company appearing to be on track to reach an agreement with lenders and bondholders to avoid bankruptcy. Atlantica Yield reported revenue of $206.4 million for the first quarter of 2016, up by 74% year-over-year. The company’s stock has gained 2% year-to-date. David Tepper’s Appaloosa Management had 6.37 million shares of Atlantica Yield PLC (NASDAQ:ABY) in its portfolio at the end of March.

The second page of this article will reveal three other stocks favored by Glendon Capital Management.

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