Beach Point Capital Management is a Los Angeles-based multi-strategy hedge fund founded by Carl Goldsmith and Scott Klein, who worked together as an investing team at Post Advisory Group starting in 1997. The fund specializes in high yield bonds, distressed debt and corporate loans, but has some stock investments too. It had $6.5 billion in assets under management as of March 31.
During a 15-year stint at Post, Goldsmith was a senior investment officer. Klein was a senior managing director. Both jointly ran Post's alternative business and co-managed the total return, distressed debt and corporate loan strategies. Goldsmith received his B.A in economics from the University of Pennsylvania's Wharton School of Business and a J.D. from the University of California, Los Angeles School of Law.
According to the latest 13F submission made to the SEC on May 13, Beach Capital owned 29 stocks worth $424.6 million at the end of the first quarter. The fund's portfolio has more than doubled since the previous quarter ($207.9 million, 4Q, 2010). Of its 29 holdings, only six yielded positive returns this quarter.
Beach Point sold three of its holdings -- CIT Group Inc. (CIT), Petrohawk Energy Corp.(HK) and Tenet Healthcare Corp. (THC) -- and cut its stake in four others this quarter. It added 13 new positions.
A summary table of Beach Point's activities is below:
CompanyName | Ticker | Value | Activity | Return |
C I T GROUP INC NEW | Sold Out | -1.1% | ||
PETROHAWK ENERGY CORP | Sold Out | -2.6% | ||
TENET HEALTHCARE CORP | Sold Out | -18.9% | ||
CHEMTURA CORP | 7569 | -66% | 0.4% | |
LIBERTY GLOBAL INC | 29604 | -21% | -3.8% | |
HORIZON LINES INC | HRZ | 1215 | -21% | 27.1% |
SPANISH BROADCASTING | 2474 | -1% | -34.4% | |
STERLING FINANCIAL CORP | 12182 | 0% | 5.4% | |
WILLIAMS COS | 20776 | 9% | -7.1% | |
EQUINIX INC | 49044 | 28% | 5.5% | |
CHARTER COMMUNICATIONS | 31937 | 30% | 10.0% | |
ENTRAVISION COMMU | 7491 | 45% | -29.2% | |
COMCAST CORP NEW | 51163 | 115% | -4.1% | |
GENCORP INC | 9341 | 138% | -0.8% | |
GEOEYE INC | 17864 | 192% | -16.5% | |
ASHLAND INC NEW | 4043 | New | 5.8% | |
ENERGIZER HOLDINGS INC | 13545 | New | -2.3% | |
ENERGYSOLUTIONS INC | 4104 | New | -18.3% | |
GENCORP INC NOTES | 11277 | New | -0.8% | |
GENERAL MOTORS CO | 11801 | New | -6.7% | |
HORIZON LINES INC NOTES | HRZ | 46110 | New | 27.1% |
I T T CORP | 9836 | New | -6.9% | |
K V PHARMACEUTICAL CO | KV.A | 5685 | New | -59.8% |
LAS VEGAS SANDS CORP | 17366 | New | -7.1% | |
LEAR CORP | 21788 | New | -0.5% | |
MARATHON OIL CORP | 5331 | New | -4.3% | |
ASPEN INSURANCE HOLDINGS | 17606 | New | -6.5% | |
EVEREST RE GROUP LTD | 13396 | New | -6.1% |
Of the 13 new positions, the largest is Horizon Lines Inc., worth $46.1 million. Horizon has already yielded a return of 27%, making it the fund's best performing new position. Ashland Inc., with a return of 5.8%, was the second best performer among new holdings. The other 11 suffered negative returns with K V Pharmaceutical the worst with a loss of nearly 60%.
Beach Point's largest position is in Comcast Corp. as it more than doubled its holding. Last quarter, it was its third largest. However, Comcast suffered a 4.1% negative return and its holding was valued at $51.2 million at the end of the quarter. John Paulson's Paulson & Co. holds 40 million shares in Comcast worth nearly $1 billion (See John Paulson's top stock picks).
Equinix Inc. slipped to second largest in Beach Point's portfolio, with a value of $49 million. It yielded a return of 5.5% this quarter. Other major holders of Equinix are Stephen Mandel's Lone Pine Capital, which holds 4 million shares valued at $367.7 million and Jeffrey Tannenbaum's Fir Tree, which owns 3 million shares worth $273.3 million.
The best performing position among Beach Capital's holdings was Horizon Lines, which gained 27%. The second best was Charter Communications, which returned 10%.
Beach Point nearly trebled its holding in GeoEye Inc. to 429,628 shares, but the holding suffered a loss of 16.5%. Other owners of this stock are Thomas Steyer's Farallon Capital, which has 624,807 shares valued at nearly $26 million and Ascend Capital, which owns 181,326 shares worth $7.5 million. Beach Point also raised its holding in GenCorp. Inc. by 38%. Other major holders of this stock are Steel Partners and Angelo Gordon.
Beach Point has returned a 0.6% return since March 31, versus S&P 500's negative return of -4.2%. We believe the fund's stock picks will continue to outperform the broader S&P 500 index in the long run.
Disclosure: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.
