New York-Based Selz Capital’s Top Picks for Q3; High-Yielding Macquarie Infrastructure Corp (MIC) Retains Top Spot

The highly anticipated quarterly 13F filings for the second quarter of 2016 are slowing flowing in, enabling retail investors and analysts to examine the equity portfolios of various elite and smaller-scale hedge fund firms. Selz Capital LLC, a New York-based investment manager operating under the guidance and supervision of founding partner Bernard Selz, is one of the few hedge fund vehicles followed by Insider Monkey that have already submitted their 13Fs for the June quarter with the U.S. Securities and Exchange Commission.

The asset manager, founded in January of 2004, invests in public equity markets across the entire globe. Selz Capital LLC operated a U.S.-focused public portfolio valued at $351.72 million at the end of the second quarter, as compared to the $329.18 million-portfolio overseen at the end of the first quarter. Without further ado, let’s have a look at the New York-based firm’s top equity holdings as of the end of the June quarter.

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#5. Gilead Sciences Inc. (NASDAQ:GILD)

– Number of shares owned by Selz Capital LLC as of June 30: 190,000

– Value of Selz Capital LLC’s holding as of June 30: $15.85 Million

Selz Capital LLC upped its position in Gilead Sciences Inc. (NASDAQ:GILD) by 40,000 shares during the June quarter to 190,000 shares. The upped position was worth $15.85 million at the end of the quarter and accounted for 4.5% of the firm’s entire portfolio. The California-based drug maker has seen its market value plunge by 14% since the start of 2016. Some analysts anticipate the company’s second-quarter sales from Hepatitis C treatments to come below consensus due to sustained pricing pressure, as well as lower market share in Europe. The disappointing stock performance of Gilead Sciences thus far in 2016 has seen partially driven by investor worries around the future prospects of the company’s two hepatitis drugs, Sovaldi and Harvoni. U.S. net product sales of Harvoni in the first quarter of 2016 were $1.4 billion, down from $3.0 billion recorded a year ago. The drop was attributable to lower average net selling prices, as well as lower demand due to a reduced number of patients starting treatment. Ken Fisher’s Fisher Asset Management cut its stake in Gilead Sciences Inc. (NASDAQ:GILD) by 9% during the June quarter to 446,493 shares.

#4. Kinder Morgan Inc. (NYSE:KMI)

– Number of shares owned by Selz Capital LLC as of June 30: 958,211

– Value of Selz Capital LLC’s holding as of June 30: $17.94 Million

The New York-based asset manager held its Kinder Morgan Inc. (NYSE:KMI) stake unchanged during the April-to-June quarter. Selz Capital LLC owned 958,211 Kinder Morgan shares at the end of June, which were valued at $17.94 million. The stake made up 5.1% of the money manager’s entire portfolio. The largest energy infrastructure company in North America has seen the value of its stock gain 48% since the beginning of the year. Kinder Morgan’s revenue for the second quarter decreased to $3.14 billion from $3.46 billion, mainly due to a 15% revenue decline from its carbon-dioxide segment as a result of lower commodity prices. The boardroom of the pipeline operator recently approved a quarterly cash dividend of $0.125 per share, after the board slashed the company’s quarterly dividend of $0.51 a share to $0.125 in December to fund growth efforts. Kinder Morgan reported net income of $372 million for the second quarter, up from $333 million posted a year ago. Warren Buffett’s Berkshire Hathaway was the owner of 26.53 million shares of Kinder Morgan Inc. (NYSE:KMI) at the end of March.

#3. Air Lease Corp (NYSE:AL)

– Number of shares owned by Selz Capital LLC as of June 30: 993,800

– Value of Selz Capital LLC’s holding as of June 30: $26.61 Million

The investment management firm run by Bernard Selz owns 993,800 shares of Air Lease Corp (NYSE:AL) as of the end of the June quarter, 100 shares less than at the end of the March quarter. The barely reshuffled stake was worth $26.61 million on June 30, constituting 7.6% of the fund’s portfolio. The leading aircraft leasing company founded by the self-proclaimed godfather of the aircraft-leasing industry, Steven F. Udvar-Hazy, has seen its market cap drop by 12% thus far in 2016. Just recently, Mr. Udvar-Hazy stepped down from his role as CEO of Air Lease and became executive chairman of the board, with the company’s Chief Operating Officer John Plueger taking over as CEO. The Los Angeles-based company owns a fleet of 239 aircraft and has 386 aircraft on order from several aircraft manufacturers as of the end of March. Royce & Associates, founded by Chuck Royce, had 1.92 million shares of Air Lease Corp (NYSE:AL) among its holdings on March 31.

#2. Magellan Midstream Partners L.P. (NYSE:MMP)

– Number of shares owned by Selz Capital LLC as of June 30: 434,650

– Value of Selz Capital LLC’s holding as of June 30: $33.03 Million

Selz Capital LLC did not adjust its position in Magellan Midstream Partners L.P. (NYSE:MMP) during the three months that ended June 30, having remained with 434,650 shares valued at $33.03 million. This position accounted for 9.4% of the fund’s overall portfolio. The shares of the publicly traded limited partnership engaged in the transportation, storage and distribution of refined petroleum products and crude oil are up 8% so far in 2016. In mid-June, analysts at Seaport Global Securities initiated coverage on MMP with a ‘Buy’ rating and a price target of $82, saying that the company’s refining-focused services are insulated from the volume declines observed in the industry and its expansion efforts could lead to higher distributions. In late April, the board of directors of MMP increased the partnership’s quarterly cash distribution to $0.8025 per unit from $0.7175 paid for the first quarter of 2015 and $0.785 paid for the fourth quarter of 2015. The latest quarterly cash distribution yields 4.34% annually. Jim Simons’ Renaissance Technologies acquired a new stake of 157,616 shares of Magellan Midstream Partners L.P. (NYSE:MMP) during the March quarter.

#1. Macquarie Infrastructure Corp (NYSE:MIC)

– Number of shares owned by Selz Capital LLC as of June 30: 1.01 Million

– Value of Selz Capital LLC’s holding as of June 30: $74.93 Million

Macquarie Infrastructure Corp (NYSE:MIC) was the largest holding in Selz Capital LLC’s portfolio at the end of the June quarter, accounting for 21.3% of the fund’s entire portfolio. The 1.01 million-share position did not suffer any adjustments during the quarter and was valued at $74.93 million on June 30. Macquarie Infrastructure owns, operates and invests in a diversified group of businesses, including a bulk of liquid terminals business; a provider of fuel, terminal and hangar services; controlling interests in gas-fired, wind and solar power facilities; as well as a gas energy company. The company paid shareholders a quarterly cash dividend of $1.20 per share for the first quarter, with the $4.80 per share annualized dividend translating into an annual dividend yield of 6.23%. More importantly, Macquarie Infrastructure plans to increase its 2016 dividend to the range of $5.00-to-$5.10 per share, up from $4.46 a share paid in 2015. Adam Usdan’s Trellus Management Company owns 14,840 shares of Macquarie Infrastructure Corp (NYSE:MIC) as of June 30.

Disclosure: None