Howard Marks (Trades, Portfolio)’ Oaktree Capital Management has revealed a second reduction in its Super Micro Computer Inc. (SMCI, Financial) holding according to GuruFocus’ Real-Time Picks, a Premium feature.
Since the formation of Oaktree in 1995, Marks has been responsible for ensuring the firm's adherence to its core investment philosophy, communicating closely with clients concerning products and strategies and managing the firm. Oaktree is involved in less efficient markets and alternative investments. The firm invests heavily in debt, preferred stocks and convertible bonds.
On June 15, the firm sold 586,390 shares of Super Micro Computer (SMCI, Financial) to cut the holding by 20.58%. The sale marks the second time this year that Oaktree has leaned out the position. On the day of the sale, the shares traded at an average price of $36.18. The sale had an overall impact on the portfolio of -0.35% and GuruFocus estimates Oaktree has gained a total of 36.44% on the holding.
Super Micro Computer provides high-performance server technology services to cloud computing, data center, Big Data, high-performance computing and "internet of things" embedded markets. Its solutions include server, storage, blade and workstations to full racks, networking devices and server management software. The firm follows a modular architectural approach, which provides flexibility to deliver customized solutions. More than half of the company's revenue is generated in the United States, with the rest coming from Europe, Asia and other regions.
As of June 18, the stock was trading at $34.32 per share with a market cap of $1.77 billion. According to the GF Value Line, the stock is trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 7 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 8 out of 10. There are currently two severe warning signs issued for the company for a low Piotroski F-Score and a declining operating margin. Despite the company growing revenue through 2019, profitability has struggled with unstable cash flows and a high weighted average cost of capital.
Marks’ Oaktree is the fourth-largest shareholder with 4.53% of shares outstanding. The top three shareholders are Vanguard Group Inc. (Trades, Portfolio), Disciplined Growth Investors Inc. /MN (Trades, Portfolio) and BlackRock Inc. (Trades, Portfolio).
Portfolio overview
As of June 18, the firm’s portfolio contained 61 stocks, with eight new holdings. It was valued at $6.03 billion and has seen a turnover rate of 19%. Top holdings in the portfolio include Star Bulk Carriers Corp. (SBLK, Financial), Vistra Corp. (VST, Financial), Chesapeake Energy Corp. (CHK, Financial), Ally Financial Inc. (ALLY, Financial) and Torm PLC (TRMD, Financial).
By weight, the top three sectors represented are energy (21.19%), financial services (16.77%) and industrials (13.54%).
