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HORSEHEAD HOLDING CORP. (ZINC): Greywolf Capital Management Boosts Its Stake to 5.2%

As a new filing with the Securities and Exchange Commission showed, Jonathan Savitz and James Gillespie‘s Greywolf Capital Management increased its stake in HORSEHEAD HOLDING CORP. (NASDAQ:ZINC). The position held by Greywolf is passive by nature and contains 2.65 million shares of the company, up from 1.54 million shares the fund revealed in its latest 13F filing. Following the increase, the stake amasses 5.2% of Horsehead’s common stock.


With the addition of HORSEHEAD HOLDING CORP. (NASDAQ:ZINC), Greywolf diversified its equity portfolio by adding another company from the industrial metals and minerals. With a price of around $15 per share, Horsehead is one of the cheapest stocks in the industry. Moreover, the company is engaged in the production of zinc and nickel-based products. With the zinc prices declining at the moment amid a significant slow-down in China’s economic growth (China is the largest producer and consumer of zinc), the stock of Horsehead took a hit and lost 25% during the last month. However, the demand for the metal is still expected to grow this year.

Moreover, HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) posted a significant increase in revenues over the last quarters, which amounted to roughly $126 million in the second quarter, versus $110 million a year ago. Nevertheless, the company’s EBITDA declined to $4.0 million from $6.0 million a year ago, and its net loss expanded to $0.10 per share, from $0.02 a year ago. Moreover, recently HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) has said that its facility in Mooresboro, North Carolina increased its production output to 4,300 tons of zinc in the third quarter, from 3,400 tons in the previous quarter. However, the company added that its financial results for the third quarter will be affected by more expenses at the facility and the production cost will be higher because of limited production.

Among the investors that we track, Mohnish Pabrai has the largest exposure to HORSEHEAD HOLDING CORP. (NASDAQ:ZINC), his stake in the company accounting for 24% of his equity portfolio. Mohnish Pabrai is a long-term investor in Horsehead, being a shareholder of the company for over 4 years. Another shareholder of Horsehead is Chuck Royce‘s Royce & Associates, which owns 2.52 million shares as of the end of June, down by 9% over the quarter.

Greywolf Capital holds a relatively comprised equity portfolio, worth $675.7 million, which contains only eight positions. However, over 47% of the portfolio is invested in SPDR S&P 500 ETF Trust (NYSEARCA:SPY) Put options, which means that Mr. Savitz and Mr. Gillespie bet on a decline of the S&P 500 (a strategy also followed by George Soros).

Disclosure: none

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