In this article, we discuss top 10 stock picks of Mark Gallogly’s Centerbridge Partners.
The most notable stocks in Mark Gallogly’s Centerbridge Partners’ 13F portfolio include First American Financial Corporation (NYSE:FAF), Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN).
Centerbridge Partners, a multi-strategy private investment firm, focuses chiefly on leveraged buyouts and distressed assets. The hedge fund, which has offices in London and New York City, manages more than $32 billion in assets. Mark Gallogly and Jeffrey Aronson established it in 2005. Centerbridge Partners raised its first fund in September 2006 with $3 billion in investor commitments, concentrating on leveraged buyouts and control investments in distressed assets. Mark Gallogly retired from Centerbridge in 2020. However, he is still the founder of the fund and owns a sizable chunk of Centerbridge Partners which is why Centerbridge Partners and Mark Gallogly are used interchangeably throughout this article.
Centerbridge Partners’ $1.3 billion Special Credit III fund saw a net 8.7% gain in 2020. It generated returns by focusing on consumer-facing businesses hit by market unrest, such as rental cars, airlines, auto components, and entertainment. In 2021, Special Credit III Flex Fund generated a gross return of 51%.
The hedge fund makes investments in both control and non-control possibilities. Non-control investments include public market debt, public market shares, and other publicly traded assets, whereas control investments include private equity and public debt with a “loan-to-own” approach. Gallogly’s first-quarter portfolio is valued at $1.57 billion, as per the latest 13F filings. With a top ten holdings concentration of 97.36%, Gallogly’s first quarter investment securities are concentrated in the Consumer, Financial Services, Healthcare, Industrials, Real Estate, Technology, and Media & Telecom sectors.
Our Methodology
For this analysis, we picked the top 10 stocks from the first quarter 13F portfolio of Mark Gallogly’s Centerbridge Partners.
Top Stock Picks of Mark Gallogly’s Centerbridge Partners
10. GDS Holdings Limited (NASDAQ:GDS)
Centerbridge Partners’ Stake Value: $13,345,000
Percentage of Centerbridge Partners’ 13F Portfolio: 0.85%
Number of Hedge Fund Holders: 26
GDS Holdings Limited (NASDAQ:GDS) is a Chinese independent data center operator. GDS Holdings Limited (NASDAQ:GDS) stock represents 0.85% of Mark Gallogly’s first-quarter holdings, with the hedge fund holding 340,009 shares of the company, worth $13.35 million. GDS Holdings Limited (NASDAQ:GDS) has featured in Centerbridge Partners’ portfolio since the second quarter of 2021.
After GDS Holdings Limited (NASDAQ:GDS)’s Q1 earnings, RBC Capital analyst Jonathan Atkin maintained an ‘Outperform’ rating on the stock but decreased his price objective to $41 from $58. Even though GDS Holdings Limited (NASDAQ:GDS)’s sales and EBITDA ramp were within the previously anticipated range, the analyst was still concerned.
By the end of the first quarter, GDS Holdings Limited (NASDAQ:GDS) was part of 26 hedge funds’ portfolios. The consolidated stakes these funds had in the company were worth $645.90 million, down from $861.73 million the prior quarter, which were held by the same number of funds. 12 West Capital Management is the most significant stakeholder of GDS Holdings Limited (NASDAQ:GDS), with a $288 million stake in the company.
Like First American Financial Corporation (NYSE:FAF), Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN), Centerbridge Partners also holds significant shares of GDS Holdings Limited (NASDAQ:GDS). As a result, GDS Holdings Limited (NASDAQ:GDS) stands 10th on the list of top stock picks of Mark Gallogly’s Centerbridge Partners.
Here is what Baron Funds said about GDS Holdings Limited (NASDAQ:GDS) in its first quarter 2022 investor letter:
“Following a 66% correction in its share price from a peak of $117 per share in February 2021, we recently reacquired shares in GDS Holdings Limited (GDS) at an average cost of $39 per share. GDS is the leading developer and operator of data centers in China. Following several years of strong share price performance, the shares of GDS corrected sharply in 2021 due to investor concerns about China’s increased regulatory scrutiny of the technology industry and a slowdown in its economy, increased competition, evidence of further tensions with U.S. regulatory agencies, and a substantial correction in technology shares broadly. At our average purchase price of $39, we believe these concerns are sufficiently discounted in the shares and remain optimistic about the company’s long-term potential to generate strong growth and increase the intrinsic value of the business.…. “(Click here to read the full text).”
9. Community Health Systems, Inc. (NYSE:CYH)
Centerbridge Partners’ Stake Value: $17,638,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1.12%
Number of Hedge Fund Holders: 25
Community Health Systems (NYSE:CYH) is a healthcare provider in the United States. The organization oversees 81 acute care hospitals, outpatient clinics, 2 stand-alone rehabilitation hospitals, and 13,289 licensed beds. However, Community Health Systems (NYSE:CYH) posted poor second-quarter results on July 27. Community Health Systems (NYSE:CYH)’s revenue was down 2.3% from the prior-year quarter, amounting to $2.93 billion, missing estimates by $210 million.
Following the “weak” Q2 results, Citi analyst Jason Cassorla reiterated a ‘Buy’ rating on Community Health Systems (NYSE:CYH) but decreased his price target to $6 from $14 on August 4. The analyst said that the share price loss has not been as severe as it first appeared because of the stock’s reset due to the revised outlook.
During the first quarter, Mark Gallogly sold out of 17% of his stake in Community Health Systems, Inc. (NYSE:CYH). His hedge fund first initiated a position in Community Health Systems in 2020. Community Health Systems, Inc. (NYSE:CYH) was in 25 hedge funds’ portfolios at the end of the first quarter compared to 28 in the previous quarter. Eversept Partners is the most significant stakeholder of Community Health Systems (NYSE:CYH), with 7.13 million shares worth $84.59 million.
8. VectoIQ Acquisition Corp. II (VTIQ) (NASDAQ:VTIQ)
Centerbridge Partners’ Stake Value: $19,168,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1.22%
Number of Hedge Fund Holders: N/A
The operations of VectoIQ Acquisition Corp. II (NASDAQ:VTIQ) are minimal. Its targeted results include a merger, share exchange, asset acquisition, stock purchase, or restructuring. VectoIQ Acquisition Corp. II (NASDAQ:VTIQ) plans to concentrate its search efforts on the transportation, smart mobility, and industrial technology sectors.
The managing partner of VectoIQ Acquisition Corp. II (NASDAQ:VTIQ) is Steve Girsky, who has more than 30 years of expertise working with top corporate and board executives, OEM leaders, labor leaders, suppliers and dealers, as well as national and local policymakers. VectoIQ Acquisition Corp. II (NASDAQ:VTIQ)’s initial public offering of 30,000,000 shares for $10.00 per unit was priced and announced on January 6.
According to the 13F filings for the first quarter of 2022, Centerbridge Partners held over 1.95 million shares of VectoIQ Acquisition Corp. II (NASDAQ:VTIQ), amounting to more than $19.2 million in value and representing 1.22% of the fund’s portfolio value. Simon Sadler’s Segantii Capital is VectoIQ Acquisition Corp. II (NASDAQ:VTIQ)’s most notable stakeholder.
7. Garrett Motion Inc. (NASDAQ:GTX)
Centerbridge Partners’ Stake Value: $24,374,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1.55%
Number of Hedge Fund Holders: 20
Garrett Motion Inc. (NASDAQ:GTX), a unique technology supplier for the automotive sector, released its financial results for the second quarter of 2022 on July 28. Compared to the second quarter of 2021, when net sales were $935 million, the latest quarter’s net sales of $859 million represented a decline of 8%. In addition, earnings per share came in at $0.15, below estimates by $0.09.
Howard Marks’ Oaktree Capital Management is the largest shareholder of Garrett Motion Inc. (NASDAQ:GTX), with 68.83 million shares worth $569.26 million. According to Insider Monkey’s data, 20 hedge funds were long Garrett Motion Inc. (NASDAQ:GTX) at the conclusion of the first quarter of 2022, with aggregate stakes valued at about $1.98 billion.
Securities filings reveal that Centerbridge Partners owned over 3.39 million shares of Garrett Motion Inc. (NASDAQ:GTX) at the end of March 2022, worth $24.37 million, and representing 1.55% of the fund’s portfolio value. In addition, Mark Gallogly’s Centerbridge Partners has kept a stake in Garrett Motion Inc. (NASDAQ:GTX) since the second quarter of 2021.
In its Q2 2022 investor letter, Alluvial Capital Management mentioned Garrett Motion Inc. (NASDAQ:GTX). Here is what the fund said:
“Garrett Motion is an exercise in patience. Just as it seemed the global automotive market was about to recover to pre-COVID production, along came Russia, inflation, and the threat of recession. Still, the company is making great strides in improving and simplifying its balance sheet. In June, the company redeemed the rest of the Series B preferred shares it issued to Honeywell when it exited bankruptcy in 2021. With the Series Bs out of the way, Garrett Motion is free to dedicate its cash flow to continued deleveraging or share buybacks. At some point in the next year or two, the conditions will be met for Garrett Motion to convert these preferreds and simplify their capital structure. If the market stubbornly refuses to value Garrett Motion shares at a reasonable price, I believe the company will pursue a sale or merger. Until then, our preferred shares will continue to accrue dividends at an attractive yield. The preferreds are worth at least $15 today, and possibly $20 or more if the company can reduce leverage and/or buy back shares and the automotive market recovers.”
6. GoHealth, Inc. (NASDAQ:GOCO)
Centerbridge Partners’ Stake Value: $48,006,000
Percentage of Centerbridge Partners’ 13F Portfolio: 3.06%
Number of Hedge Fund Holders: 13
GoHealth, Inc. (NASDAQ:GOCO) is based in Chicago and owns and runs a digital health insurance marketplace. GoHealth, Inc. (NASDAQ:GOCO)’s $914 million IPO, one of the most expensive in the history of health IPOs, was priced at $21 a share. However, the value of the shares has subsequently dropped precipitously, as they are currently selling for close to 97% less than what they did during the IPO.
GoHealth, Inc. (NASDAQ:GOCO) ranks 6th on our list of top 10 stock picks of Mark Gallogly’s Centerbridge Partners. Gallogly’s fund holds a $48.01 million position in GoHealth, Inc. (NASDAQ:GOCO), which accounts for 3.06% of his total Q1 13F investments. Centerbridge Partners is the most significant stakeholder of GoHealth, Inc. (NASDAQ:GOCO). In addition, the number of hedge funds tracked by Insider Monkey owning stakes in GoHealth, Inc. (NASDAQ:GOCO) fell to 13 in the first quarter from 15 in the preceding quarter. Those stakes held a consolidated value of $61.21 million, down from $177.61 million.
Just like First American Financial Corporation (NYSE:FAF), Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN), GoHealth, Inc. (NASDAQ:GOCO) is one of the stocks to buy according to Mark Gallogly.
5. INDUS Realty Trust, Inc. (NASDAQ:INDT)
Centerbridge Partners’ Stake Value: $99,200,000
Percentage of Centerbridge Partners’ 13F Portfolio: 6.33%
Number of Hedge Fund Holders: 10
INDUS Realty Trust, Inc. (NASDAQ:INDT), a real estate investment trust, is one of the top stocks to buy according to Mark Gallogly’s Centerbridge Partners. The fund elevated its position in INDUS Realty Trust, Inc. (NASDAQ:INDT) by 39% to build a $99.2 million stake in the company. INDUS Realty Trust, Inc. (NASDAQ:INDT) has 41 structures totaling about 4.6 million square feet in Connecticut, North Carolina, Pennsylvania, and Florida, in addition to more than 3,400 acres of undeveloped property.
On May 23, Colliers initiated coverage of INDUS Realty Trust, Inc. (NASDAQ:INDT), assigning the company a ‘Neutral’ rating and $70 price objective. INDUS Realty Trust, Inc. received little attention from smart investors in the first quarter of 2022. According to Insider Monkey’s quarterly filings data, 10 funds were bullish on INDUS Realty Trust, Inc. (NASDAQ:INDT), down from 13 in the fourth quarter of 2021.
In its Q4 2021 investor letter, Clark Street Value, an investment management firm, mentioned INDUS Realty Trust, Inc. (NASDAQ:INDT). Here is what the fund said:
“INDUS Realty Trust (INDT) will similarly just be in my tuck it away and forget about it pile for now, it is a logistics/warehouse REIT that has recruited much of the old Gramercy Property Trust (GPT) team, with the former CFO, Jon Clark, taking over at year end to round out things out. The tailwinds are pretty clear, and with a relatively small asset base and experienced team, they can be “sharp shooters” as they describe it, pick and choose smaller deals the likes of Blackstone can’t be bothered with to assemble a portfolio.”
4. Genco Shipping & Trading Limited (NYSE:GNK)
Centerbridge Partners’ Stake Value: $107,815,000
Percentage of Centerbridge Partners’ 13F Portfolio: 6.88%
Number of Hedge Fund Holders: 19
Genco Shipping & Trading Limited (NYSE:GNK) is a global ship owner which transports dry bulk commodities such as iron ore, coal, grain, and steel goods. As of December 31, 2021, the firm’s fleet comprised 44 dry bulk carriers with a total capacity of about 4.64 million deadweight tonnes. Genco Shipping & Trading Limited (NYSE:GNK) is a fantastic investment for income seekers because of its 17% dividend yield.
Genco Shipping & Trading Limited (NYSE:GNK) reported strong financials for the second quarter of 2022 on August 3, revealing revenue of $138 million, up 13.9% year-over-year. In addition, the company’s earnings per share for the second quarter were $1.10, compared to $0.75 a year earlier. On August 3, Alliance Global Partners analyst C. K. Poe Fratt initiated coverage of Genco Shipping & Trading Limited (NYSE:GNK), rating the stock a ‘Buy’, with a price target of $29.
Centerbridge Partners holds more than 4.56 million shares of Genco Shipping & Trading Limited (NYSE:GNK), worth nearly $108 million, representing 6.88% of the fund’s portfolio exposure. In the first quarter of 2022, 19 hedge funds tracked by the database of Insider Monkey were long Genco Shipping & Trading Limited (NYSE:GNK), down from 20 in the preceding quarter. Bailard Inc is a prominent stakeholder of Genco Shipping & Trading Limited (NYSE:GNK), with 17,000 shares worth $328,000.
3. Radius Global Infrastructure, Inc. (NASDAQ:RADI)
Centerbridge Partners’ Stake Value: $156,009,000
Percentage of Centerbridge Partners’ 13F Portfolio: 9.95%
Number of Hedge Fund Holders: 21
Radius Global Infrastructure, Inc. (NASDAQ:RADI) purchases, owns, and rents land, fiber, and data center assets to tower companies and other parties. In the U.S and 19 other nations, it owns interests in 8,506 leases placed on 8,186 communications sites. Mark T. Gallogly’s Centerbridge Partners is Radius Global Infrastructure, Inc. (NASDAQ:RADI)’s largest investor, holding a $156 million stake of 10.9 million shares.
On May 10, Raymond James analyst Ric Prentiss maintained a ‘Strong Buy’ rating on Radius Global Infrastructure, Inc. (NASDAQ:RADI) and increased his price target to $22 from $18. For the first quarter of 2022, Insider Monkey conducted an in-depth analysis of 912 hedge funds’ portfolios. Consequently, we discovered that 21 funds had invested in Radius Global Infrastructure, Inc. (NASDAQ:RADI).
2. Cedar Fair, L.P. (NYSE:FUN)
Centerbridge Partners’ Stake Value: $162,509,000
Percentage of Centerbridge Partners’ 13F Portfolio: 10.37%
Number of Hedge Fund Holders: 12
Cedar Fair, L.P. (NYSE:FUN) is a regional amusement park operator. The company’s portfolio has 13 properties, including 11 theme parks, four independently guarded outdoor water parks, resort lodging with more than 2,300 rooms, and more than 600 luxurious RV sites. According to Insider Monkey’s first quarter data, 12 hedge funds were bullish on Cedar Fair, L.P. (NYSE:FUN).
On August 3, Cedar Fair, L.P. (NYSE: FUN) announced its earnings for the second quarter, which included revenue of $509 million, which demonstrates a year-over-year increase of 127%. In addition, EPS was reported to be $0.89, which missed estimates by $0.51.
Subsequently, on August 4, Truist analyst Michael Swartz maintained a ‘Buy’ rating on Cedar Fair, L.P. (NYSE:FUN), while reducing his price target to $58 from $67. The analyst claimed that even though Cedar Fair, L.P. (NYSE: FUN)’s Q2 profitability fell short of projections, the underlying price and visitation information seemed to point to a healthy demand environment.
Centerbridge Partners initially bought Cedar Fair, L.P. (NYSE:FUN) in the third quarter of 2021. The hedge fund boosted its Cedar Fair, L.P. (NYSE:FUN) stake by 34% in the first quarter of 2022, purchasing an additional 742,695 shares. As a result, Cedar Fair, L.P. (NYSE:FUN) accounted for 10.37% of the hedge fund’s equity portfolio value at the end of Q1.
1. Garrett Motion Inc. (NASDAQ:GTX)
Centerbridge Partners’ Stake Value: $547,534,000
Percentage of Centerbridge Partners’ 13F Portfolio: 34.94%
Number of Hedge Fund Holders: 20
Garrett Motion Inc. (NASDAQ:GTX) and its subsidiaries develop, manufacture, and sell electric-boosting and turbocharger technologies all over the world. Regulatory filings show that Centerbridge Partners owned more than 66.21 million shares of Garrett Motion Inc. (NASDAQ:GTX) at the end of March worth $548 million, which represented a hefty 34.9% of its portfolio exposure, nearly 250% more than the next largest holding.
On July 28, Garrett Motion Inc. (NASDAQ:GTX) published its financial results for the second quarter, announcing earnings per share of $0.15, missing estimates by $0.09. In addition, its $859 million in revenue for the period was down 8.1% year-over-year and below estimates by $21 million.
Among the hedge funds tracked by Insider Monkey, Oaktree Capital Management is a leading shareholder of Garrett Motion Inc. (NASDAQ:GTX), with 68.9 million shares worth more than $569 million. At the end of the first quarter, 20 hedge funds held stakes in Garrett Motion Inc. (NASDAQ:GTX), an increase from 19 funds in the preceding quarter.
In its Q2 2022 investor letter, Alluvial Capital Management, an asset management firm, mentioned Garrett Motion Inc. (NASDAQ:GTX). Here is what the fund said:
“Garrett Motion is an exercise in patience. Just as it seemed the global automotive market was about to recover to pre-COVID production, along came Russia, inflation, and the threat of recession. Still, the company is making great strides in improving and simplifying its balance sheet. In June, the company redeemed the rest of the Series B preferred shares it issued to Honeywell when it exited bankruptcy in 2021. With the Series Bs out of the way, Garrett Motion is free to dedicate its cash flow to continued deleveraging or share buybacks. At some point in the next year or two, the conditions will be met for Garrett Motion to convert these preferreds and simplify their capital structure. If the market stubbornly refuses to value Garrett Motion shares at a reasonable price, I believe the company will pursue a sale or merger. Until then, our preferred shares will continue to accrue dividends at an attractive yield. The preferreds are worth at least $15 today, and possibly $20 or more if the company can reduce leverage and/or buy back shares and the automotive market recovers.”
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Disclosure: None. Top 10 Stock Picks of Mark Gallogly’s Centerbridge Partners is originally published on Insider Monkey.
