According to a recent filing with the Securities and Exchange Commission Levin Capital Strategies, which is managed by John A. Levin, has further trimmed its stake in New Senior Investment Group Inc (NYSE:SNR) to 4.48 million shares from 4.51 million shares. The stake, which is held together with affiliated entities, amasses about 5.18% of the company’s outstanding stock. Out of these, 680,618 shares grant Levin Capital sole voting power while about 3.27 million shares represent shared voting power. Additionally, Levin Capital has also entered into swap contracts involving 137,263 shares of New Senior Investment Group with an affiliate of JP Morgan. Accompanying this new development is the letter that Levin recently has sent to New Senior Investment Group Inc (NYSE:SNR)’s management in connection with the company’s slumping stock price which he believes is rooted in the external management by Fortress.
Levin served as President of the BKF Capital Group before he established the New York City-based Levin Capital Strategies in 2005. Most of the fund’s picks are large-cap companies that satisfy the fund’s bottom-up approach. Currently, the value of Levin Capital’s public equity portfolio stands at $6.76 billion, with 17% of the holdings belonging to the finance sector, one of which is New Senior Investment Group Inc (NYSE:SNR).
Following activist funds like Levin Capital is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Levin Capital can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activist hedge funds have been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 37 months since our small-cap strategy was launched it has returned over 118% and beaten the S&P 500 ETF (SPY) by more than 60 percentage points (read more details here).
Follow John A. Levin's Levin Capital Strategies
In his letter to New Senior Investment Group Inc (NYSE:SNR), Levin highlighted the more than 50% drop in the company’s stock price since its spinoff from Newcastle Investment Corp. (NYSE:NCT) in October 2014. This slump has come despite an impressive performance by CEO Susan Givens, who managed to increase occupancy rates at the company’s properties and also considerably grow its Funds from Operations (FFO).
Levin pointed out that the problem doesn’t lie with New Senior Investment Group Inc (NYSE:SNR)’s management, but with the external management structure involving Fortress Investment Group LLC (NYSE:FIG), which has misaligned the interest of New Senior’s shareholder’s with that of its management. The evidence of this can be seen in the double digit drop in stock price of companies that were spun-off from Newcastle following an announcement during Fortress’ second quarter conference call regarding Fortress Permanent Capital Vehicle (PCV), to which all the spun-off companies had an exposure. Fortress stated its intent to raise between $12 billion to $15 billion in capital for PCV by the end of the year, while the capital at that time stood at $6 billion. New Senior Investment Group Inc (NYSE:SNR)’s mistimed equity offerings in the past, relating to transactions involving Fortress, have wrecked havoc, with the June 22 offering as one example. Hence there is an urgent need of separation of the two businesses, if the management ever wants to climb out of the hole that they have dug themselves in.
Follow New Senior Investment Group Inc.
Follow New Senior Investment Group Inc.
Among over 700 hedge funds that we track the interest in New Senior Investment Group Inc (NYSE:SNR) has risen during the June trimester as a total of 27 funds had total investments worth $351.16 million in the company as compared to 22 firms with $293.14 million held in shares at the end of March. Veteran investor Leon Cooperman‘s Omega Advisors hiked its stake in New Senior by 94% during the second quarter to head our list of New Senior’s shareholders with some 5.45 million shares valued at $72.86 million, while John Osterweis‘ Osterweis Capital Management owned some 4.09 million shares valued at $54.67 million.
Disclosure: None
