Matthew Mark’s Jet Capital Investors has filed a Schedule 13D with the Securities and Exchange Commission indicating it has trimmed its stake in SunCoke Energy Inc. (NYSE:SXC) by 2.36 million shares since its most recent 13F filing. According to this freshly-amended filing, Jet Capital Investors currently owns 1.76 million shares in the producer of metallurgical coke, which represents 2.7% of the company’s outstanding common stock. This move might come as a result of the fund’s discontent about the lack of action by the company in creating shareholder value in spite of clear alternatives within management’s control. In February, Jet Capital Investors sent a letter to SunCoke’s management that points out some strategic actions that the company could implement in order to create shareholder value; however, the company’s response was continued inaction, which led to a further decline in its share price (see more details).
Jet Capital Investors LP is a New York-based hedge fund established by Matthew Mark in 2002. The investment firm is primarily implementing merger arbitrage, capital structure arbitrage, and event-oriented trading strategies in investing its capital in the public equity and fixed income markets around the world. Jet Capital Investors currently has $2.4 billion in assets under management, which grants it the title of a large investment firm with over $1 billion in assets. The public equity portfolio managed by Matthew Mark and his team consists of nearly 50 active positions as of March 31, while the market value of these positions at the time came to $3.32 billion. At the same time, the hedge fund manages a relatively diversified public equity portfolio, with its holdings dispersed across the following sectors: 29.68% in the services sector, 23.47% in the utilities sector, and 10.87% and 7.56% in the healthcare and capital goods sectors, respectively.
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 801percentage points (139.7% return vs. S&P 500’s 58.7% gain) over the last 34 months (see the details here).
SunCoke Energy Inc. (NYSE:SXC) is a producer and supplier of high-quality coke to the integrated steel industry under long-term take-or-pay coke contracts. The company has gained the position of being the largest independent producer of metallurgical coke in both North America and South America, operating in this industry for over 45 years. SunCoke Energy mines metallurgical coal in underground and surface mines and operates a number of coke making facilities in the U.S. and Brazil. In addition to that, SunCoke Energy is the sponsor of SunCoke Energy Partners L.P. (NYSE:SXCP), a publicly traded master limited partnership, with 2% general partner interest, 56% limited partnership interest, and all of the incentive distribution rights.