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‘A Vulture Hedge Fund’ — Alden Global’s Top 10 Stock Picks

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·9 min read
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In this article, we discuss the top 10 stock picks of Alden Global. If you want to skip our detailed analysis of these stocks, go directly to Alden Global's Top 5 Stock Picks.

The hedge fund industry is not the most popular financial institution in the world. However, New York-based Alden Global Capital has gained a special notoriety that is quite unprecedented. The fund, controlled by Randall Smith, is a small one by comparison to the size of the hedge fund industry. At the end of the second quarter of 2021, it had a portfolio value of more than $49 million with the top holdings in the basic materials and the services sectors. Alden specializes in investments in distressed media firms, especially local newspapers.

It is no secret that for the fund, business is booming in the digital age. According to research by the Hussman School of Media and Journalism, a quarter of all US newspapers have died in the last 15 years. This crisis has led to a new business, of sorts. A Financial Times report claims that half of all daily newspapers in the US are now under financial firms. Some of these firms, like Alden Global, hunt for a distressed newspaper and invest in it to churn out as much profit as possible from it in a short period before gutting the paper altogether.

Charlie Johnson, a former reporter, told McKay Coppins of The Atlantic earlier this month that this business strategy of Alden had earned it a new nickname - the “Vulture” fund. This is quite embarrassing for a fund that runs over 200 newspapers - the second largest newspaper owner in the US by circulation - including Chicago Tribune, The Baltimore Sun, and the New York Daily News, among others. Coppins has highlighted how Alden, through management shuffles, relocation, and other cost-cutting measures, diverted profits from newspapers to other ventures.

These include investments in real estate, bonds, and some other “risky” bets that are a part of public record. The 13F filings of the fund indicate that the fund owned over 11 million shares in Tribune Publishing, one of the premier newspaper publishers in the US, worth $207 million at the of the first quarter of this year, representing close to 80% of the portfolio of the fund. However, the regulatory filings for the second quarter show that by June, the fund had exited its stake in the company completely, perhaps in a bid to shed off the “vulture” tag.

Investors eager to find out more about the business strategy of the secretive Smith - the fund manager, despite being a media mogul, has refused to field press interviews since the 1980s - should check out some of the top stock picks of Alden Global Capital. At the end of the second quarter of 2021, these included Devon Energy Corporation (NYSE:DVN), Scorpio Tankers Inc. (NYSE:STNG), and Baker Hughes Company (NYSE:BKR), among others.

Pixabay/Public Domain

Our Methodology

With this context in mind, here is our list of the top 10 stock picks of Alden Global. These were picked from the investment portfolio of Alden Global Capital at the end of the second quarter of 2021.

The list is compiled according to the value of each holding in the portfolio of Alden Global Capital. The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.

Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

'A Vulture Hedge Fund' — Alden Global's Top Stock Picks

10. GameStop Corp. (NYSE:GME)

Number of Hedge Fund Holders: 18

GameStop Corp. (NYSE:GME) is one of the famous “meme stocks” - equities which have soared on the back of retail investor interest but have little to offer in terms of basic fundamentals. The company missed market estimates on earnings per share by $0.09 in the third quarter. The stock remains one of the most volatile on the market, with the 52-week price range hovering between $10 and $483.

According to 13F filings, Alden Global Capital owned 10,000 shares in GameStop Corp. (NYSE:GME) worth over $2.1 million at the end of the second quarter of 2021, representing 4.29% of the portfolio of the fund.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in GameStop Corp. (NYSE:GME) with 2.7 million shares worth more than $595 million.

Just like Devon Energy Corporation (NYSE:DVN), Scorpio Tankers Inc. (NYSE:STNG), and Baker Hughes Company (NYSE:BKR), GameStop Corp. (NYSE:GME) is one of the stocks that is attracting the attention of investors on social media.

In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and GameStop Corp. (NYSE:GME) was one of them. Here is what the fund said:

“The first quarter saw some bizarre market reactions. Game Stop is a heavily shorted legacy video game retailer that saw its stock price rise from $17 to a peak of $483 within a month. It appears that retail investors on a Reddit.com forum called WallStreetBets used memes to create a viral feedback loop of forced buying. Game Stop reached $20 billion in market cap and had more daily trading volume than Apple at one point. The Game Stop short squeeze became a black swan event for the short sellers. Large hedge funds such as Melvin Capital suffered 50% losses during a short period and required emergency capital injections that resulted in costly dilution. Shorting is difficult and introduces a risk of ruin. This is especially true in situations where a large percentage of the float is shorted. We want to remind you that we hedge our portfolio via index puts, sector puts, and sometimes buying puts directly in our own portfolio companies. However, we rarely short because 1) we are not good at it 2) the potential for brain damage is too high and 3) we want to avoid the risk of ruin.”

9. Pioneer Natural Resources Company (NYSE:PXD)

Number of Hedge Fund Holders: 45

Pioneer Natural Resources Company (NYSE:PXD) is among the energy stocks that have benefited from the recent increase in oil prices. Earlier this month, crude oil topped $80 per barrel for the first time in seven years. A further boost is expected as the winter season approaches and the demand for crude rises. Truist, Citi, and Goldman Sachs have all covered the stock positively in the past few weeks.

According to the latest data, Alden Global Capital owned 15,000 shares in Pioneer Natural Resources Company (NYSE:PXD) at the end of June 2021 worth more than $2.4 million, representing 4.89% of the portfolio of the fund.

Among the hedge funds being tracked by Insider Monkey, Wyoming-based investment firm Adage Capital Management is a leading shareholder in Pioneer Natural Resources Company (NYSE:PXD) with 1.2 million shares worth more than $206 million.

8. Great Elm Group, Inc. (NASDAQ:GEG)

Number of Hedge Fund Holders: 9

In September, Great Elm Group, Inc. (NASDAQ:GEG) reported earnings for the fourth fiscal quarter, posting $16 million in revenue, up over 11% compared to the revenue over the same period last year. The company operates as a diversified holding firm and has a market cap of more than $54 million. Earlier this month, the company sold interests in the real estate business for close to $5 million.

Securities filings reveal that Alden Global Capital owned 1.2 million shares in Great Elm Group, Inc. (NASDAQ:GEG) at the end of the second quarter of 2021 worth over $2.8 million, representing 5.78% of the portfolio of the fund.

At the end of the second quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $22 million in Great Elm Group, Inc. (NASDAQ:GEG), up from 8 in the previous quarter worth $19 million.

In addition to Devon Energy Corporation (NYSE:DVN), Scorpio Tankers Inc. (NYSE:STNG), and Baker Hughes Company (NYSE:BKR), Great Elm Group, Inc. (NASDAQ:GEG) is one of the stocks that is on the radar of elite investors.

7. Great Elm Capital Corporation (NASDAQ:GECC)

Number of Hedge Fund Holders: 4

Great Elm Capital Corporation (NASDAQ:GECC) is a business development firm headquartered in Waltham. The company makes small investments in middle markets, generally favoring domains like health, media, and communications services. The firm has solid fundamentals. It beat market estimates on earnings per share and total investment income in the second quarter. It also declared a quarterly dividend of $0.10 per share in late August, in line with previous.

Regulatory filings show that Alden Global Capital owned more than 902,292 shares in Great Elm Capital Corporation (NASDAQ:GECC) at the end of June 2021 worth $3.1 million, representing 6.35% of the portfolio of the fund.

At the end of the second quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $9.3 million in Great Elm Capital Corporation (NASDAQ:GECC), the same as in the previous quarter worth $8.5 million.

Devon Energy Corporation (NYSE:DVN), Scorpio Tankers Inc. (NYSE:STNG), and Baker Hughes Company (NYSE:BKR) are some of the top stocks to buy now, along with Great Elm Capital Corporation (NASDAQ:GECC).

6. Teekay Tankers Ltd. (NYSE:TNK)

Number of Hedge Fund Holders: 10

Last month, Teekay Tankers Ltd. (NYSE:TNK) announced that it had entered into an agreement with the Australian government to provide marine services to five government vessels for up to six years. The increased demand for oil has also helped bring in business for the firm after a torrid 2020. In August, the company reported a revenue of more than $123 million for the second quarter, beating estimates by $68 million.

Alden Global Capital owned more than 257,200 shares in Teekay Tankers Ltd. (NYSE:TNK) at the end of the second quarter of 2021 worth over $3.7 million, representing 7.44% of the portfolio of the fund.

Among the hedge funds being tracked by Insider Monkey, Singapore-based investment firm Amitell Capital is a leading shareholder in Teekay Tankers Ltd. (NYSE:TNK) with 225,992 shares worth more than $3.2 million.

Devon Energy Corporation (NYSE:DVN), Scorpio Tankers Inc. (NYSE:STNG), and Baker Hughes Company (NYSE:BKR) are some of the elite stocks to buy now, just like Teekay Tankers Ltd. (NYSE:TNK).

Click to continue reading and see Alden Global's Top 5 Stock Picks.

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Disclosure. None. 'A Vulture Hedge Fund' — Alden Global's Top 10 Stock Picks is originally published on Insider Monkey.