As stated by a recent Schedule 13D form filing submitted to the U.S. Securities and Exchange Commission (SEC), Michael Weinstock’s Monarch Alternative Capital presently owns slightly more than 34.0 million shares of Scorpio Bulkers Inc. (NYSE:SALT), which represent 18.86% of the 180.30 million shares of the company’s outstanding Common Stock. According to the most recent 13F filing, the hedge fund owned 33.94 million shares in Scorpio Bulkers as of March 31.
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Monarch Alternative Capital LP, a hedge fund firm with offices in New York and London, was co-founded by Michael Weinstock in 2002. The private investment firm is well-known for its expertise and successful track record investing in distressed debt companies. Moreover, the success of the hedge fund should be attributed to the ongoing experience of its co-founders, Weinstock, Andrew Herenstein, and Chris Santana, since they joined Lazard Frères & Co. to build an industry-leading distressed debt research firm. Monarch Alternative Capital manages approximately $5.0 billion in net assets under management as of March 31, 2015. Meanwhile, the value of its public equity portfolio is estimated at $415.95 million as shown by the most up-to-date 13F filing. Monarch’s recent filings with the SEC also reveal that Michael Weinstock bets big on other tanker companies including: Scorpio Tankers Inc. (NYSE:STNG) and Star Bulk Carriers Corp. (NASDAQ:SBLK).
Of note in the latest filing on Scorpio Bulkers Inc. (NYSE:SALT) is the fact that Monarch Alternative Capital filed a 13D, as its position was previously passive. In it, the fund disclosed that it might consider purchasing more shares of the company if it had the right to designate some of the members of the board. However, the filing also indicates that the hedge fund does not seek to change or influence the control or management of Scorpio Bulkers. Therefore, as the hedge fund plans to meet and discuss with Scorpio Bulkers’ management regarding the company’s business, strategies, and capital structure, it seems that the team led by Michael Weinstock intends to assist the company in confronting its stagnating operations in order to maximize shareholder value.
Scorpio Bulkers Inc. is a provider of marine transportation of dry bulk commodities, including iron ore, coal, grain and steel products, incorporated in the Marshall Islands. On June 10, the company announced it had priced a public offering of 133 million shares at $1.50 each. The offering is anticipated to close on June 16, with the net proceeds intended for use towards funding the company’s installment payments meant for the Newbuilding Program, which consists of contracts for the construction of 70 dry bulk vessels. Additionally, the company accorded 30-day greenshoe options that will allow the underwriters to purchase up to 19.95 million extra shares.
Moving on to Scorpio Bulkers’ financial performance during the most recent fiscal quarter, we can state that the company is delivering better-than-expected results despite reporting a loss of $52.1 million for the quarter. The company reported a loss, adjusted for non-recurring costs, of $0.10 per share, beating the Zacks Estimate of $0.11. However, the company did not manage to deliver revenues that would reach Wall Street analysts’ estimates of $13.7 million, reporting revenues of $12.3 million for the period. Ultimately, it is indisputable that the recently-announced public offering will help Scorpio Bulkers Inc. (NYSE:SALT) strengthen its balance sheet and give it access and space to grow further. Therefore, the stock might represent a really cheap buying opportunity. Marc Lasry’s Avenue Capital represents one of the largest shareholders in Scorpio Bulkers Inc. (NYSE:SALT), owning as much as 16.33 million shares.
Let’s now take a glance at the two other sizable holdings of Monarch Alternative Capital. Weinstock left his position in Scorpio Tankers Inc. (NYSE:STNG), the sister company of Scorpio Bulkers, unchanged during the most recent quarter, at nearly 6.30 million shares that are valued at $59.34 million. The stock has increased by 10% year-to-date and can go higher as it has recently embarked on a strong uptrend. A few weeks ago, Scorpio Tankers announced its agreement to purchase four LR2 product tankers and has also received the delivery of three newbulding vessels, which clearly indicates that the company has been expanding its operations and activities. James Dinan’s York Capital Management is by far the largest shareholder of Scorpio Tankers Inc. (NYSE:STNG) in our database, holding an equity stake of 14.81 million shares worth $139.48 million.
According to another Schedule 13D filing with the SEC, Monarch Alternative Capital owns nearly 11.49 million shares in Star Bulk Carriers Corp. (NASDAQ:SBLK), which represent 5.25% of the company’s common stock. Weinstock purchased 1.87 million shares since the reporting period of his latest 13F form filing. Considering the fact that the stock has decreased by as much as 53% since the beginning of 2015, Star Bulk might represent a buying opportunity with great potential in the future. Amit Mehrotra, a Deutsche Bank analyst, has recently upgraded the rating on the stock from “Sell” to “Hold”, which might mark the end of Star Bulk’s strong downtrend experienced throughout the last months. The largest investor in Star Bulk Carriers Corp. (NASDAQ:SBLK) is Howard Marks’ Oaktree Capital Management, which owns an exorbitant stake of 82.15 million shares as of March 31, 2015.
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