Putting aside Michael Dell’s large ownership interest in Dell Computers (DELL), the top five holdings of MSD Capital are below. MSD Capital takes concentrated positions in public and private companies; it has only invested in 13 public companies currently. The $10 billion portfolio takes a value investing approach, and also invests in private equity, real estate, special opportunities—through 3rd party hedge fund managers. The current value of MSD Capital’s stock portfolio is just under $1 billion. The following list constitutes their top five holdings:
Energy XXI Ltd. (EXXI): EXXI, a driller, makes up more than 15% of MSD Capital’s portfolio. The company's stock has reached near 52-week highs and carries a market cap of $2.5 billion. Seth Klarman sold out of his position in EXXI in the fourth quarter, which he had bought after the BP spill depressed stock prices of drillers.
DineEquity (DIN): DineEquity owns IHOP and Applebee's and operates about 3,500 restaurants. The stock makes up nearly 14% of the portfolio and is also near 52-week highs. Analysts expect casual diners including DineEquity to continue to do well in the near term as customers look for cheap alternatives to eating in.
Echostar (SATS): MSD Capital owns about 4% of Echostar, and it makes up more than 10% of the portfolio. Echostar shares have nearly doubled in the last four months because of litigation between Echostar, Dish and Tivo, regarding a patent dispute.
Wright Express (WXS): Wright Express is a $2 billion market cap company that provides payment processing and management for commercial and government vehicles. Like the other names, Wright Express is also near its 52-week highs. There have been a lot of insider sales lately at the management level, which is disconcerting, but the company has continued to produce solid revenue figures.
Domino’s Pizza (DPZ): MSD Capital obviously is a big believer in Domino’s new pizza recipe. They were buyers in the third and fourth quarter, and the stock makes up about 8% of the portfolio. They have been rewarded with steady gains so far. Of course, like the other 4 stocks listed here, Domino’s is also near 52-week highs. The company saw revenue and earnings gains from hitting the reset button on their pizzas. The challenge now will be to continue the momentum for the rest of the year.
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