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James Li
James Li
Articles (863)  | Author's Website |

Oaktree’s Top 5 Industrial Companies

Alternative investment firm continues investing in transportation and logistics companies

July 31, 2019 | About:

According to current portfolio statistics, Oaktree Capital Management’s top five industrial holdings are TORM PLC (NASDAQ:TRMD), Star Bulk Carriers Corp. (NASDAQ:SBLK), Eagle Bulk Shipping Inc. (NASDAQ:EGLE), Euronav NV (NYSE:EURN) and Azul SA (NYSE:AZUL).

Oaktree Chairman Howard Marks (Trades, Portfolio) is responsible for ensuring the firm’s adherence to its core investment philosophy and communicating closely with clients concerning products and strategies. The firm is involved in less-efficient markets and alternative investments; additionally, Oaktree invests heavily in debt, preferred stocks and convertible bonds.

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Oaktree has not released its portfolio for the quarter ended June 30 as the deadline is 45 days after quarter-end. As of the March quarter, the firm’s $3.87 billion equity portfolio has 21.40% weight in industrials, the largest sector in terms of portfolio weight.

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TORM PLC

Oaktree owns 47,600,172 shares of TORM, giving the stake 9.25% weight in the equity portfolio. The position represents the firm’s second-largest holding, below Vistra Energy Corp. (VST). Shares of TORM averaged $7.71 during the first quarter.

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The U.K.-based company owns and operates product tankers and dry carriers. GuruFocus ranks TORM’s financial strength 5 out of 10: Although the company has an equity-to-asset ratio that outperforms 60% of global competitors, it has a Piotroski F-score that suggests poor business operations, an Altman Z-score that suggests possible financial distress and a Beneish M-score that suggests possible earnings manipulation.

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Star Bulk Carriers

On May 29, Oaktree reported a holding of 6,751,448 shares, according to GuruFocus Real-Time Picks. Shares traded at $7.67.

The Greek seaborne transportation solutions provider owns and operates dry bulk carrier vessels that transport iron ore, coal, grains and other bulk products. GuruFocus ranks Star Bulk’s financial strength 4 out of 10: Although the company has an equity-to-asset ratio that outperforms 60% of global competitors, its Altman Z-score of 0.75 suggests possible financial distress.

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Eagle Bulk Shipping

Oaktree reported on July 25 it increased its Eagle Bulk Shipping holding to 28,144,449 shares, up 7.15% from the number of shares reported during the first quarter. Shares traded at $4.73.

The Stamford, Connecticut-based operator of dry bulk vessels said on Monday that revenues for the June quarter declined 7% year over year, with time-charter-equivalent revenues down 18%. Eagle Bulk CEO Gary Vogel said the decline in revenues reflected a “challenging freight environment” during the first half of the year.

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GuruFocus ranks Eagle Bulk’s financial strength 5 out of 10: Although the company has a strong Piotroski F-score of 7, it has interest coverage less than Benjamin Graham’s safe threshold of five and an Altman Z-score that further suggests financial distress.

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Euronav

Oaktree owns 8,107,246 shares of Euronav, giving the position 1.71% equity portfolio weight. Shares averaged $7.83 during the first quarter.

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Belgium-based Euronav owns and operates a fleet of vessels for international maritime shipping and storage of crude oil and petroleum products. GuruFocus ranks the company’s financial strength 4 out of 10 on the heels of an Altman Z-score that suggests possible financial distress. Despite this, Euronav’s cash-to-debt and debt-to-equity ratios are outperforming over 61% of global competitors.

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Azul

Oaktree owns 1,479,868 shares of Azul, giving the stake 1.12% equity portfolio weight. Shares averaged $29.85 during the first quarter.

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The Brazilian airline provides airline and cargo services, with destinations including Fort Lauderdale, Florida, Orlando, Florida and Lisbon, Spain. GuruFocus ranks Azul’s profitability 6 out of 10: Even though margins and returns are underperforming over 80% of global competitors, the company's Joel Greenblatt (Trades, Portfolio) return on capital is outperforming 81.67% of global competitors while its three-year revenue growth rate is outperforming 66.13% of industry peers.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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