In this article, we discuss 10 stocks to buy according to Mark T. Gallogly’s Centerbridge Partners. If you want to skip our detailed analysis of Gallogly’s investment philosophy and portfolio construction, go directly to 5 Stocks to Buy According to Mark T. Gallogly’s Centerbridge Partners.
Mark Gallogly and Jeffrey Aronson established Centerbridge Partners in 2005. Aronson began his legal career at Stroock & Stroock & Lavan before taking on the role of Centerbridge Partners’ investment activities manager. Although he still owns a sizable piece of Centerbridge Partners and is the fund’s inventor, Gallogly left the hedge fund in December 2020. For this reason, the words Centerbridge Partners and Mark Gallogly are used alternately in this article.
The Special Credit III Flex Fund of the New York-based hedge fund Centerbridge Partners generated a total return of 51% for 2021. The fund performed better thanks to investments, including the insurance company HCI Group Inc. and the auto parts producer Garrett Motion Inc. The $1.3 billion Special Credit III Fund, Centerbridge’s flagship product, generated a 37% total return for the year 2021.
The multi-strategy investment company Centerbridge Partners is well known for its private equity division. However, the fund also has a sizable interest in listed businesses. Centerbridge Partners favours using growth equity and buyouts to make majority stakes. The hedge fund’s second-quarter portfolio is valued at $1.13 billion, as per the latest 13F filings, with a top ten holdings concentration of 98.65%. The hedge fund looks to invest in businesses in the financial services, consumer, real estate, and transport sectors, with headquarters in the US, Western Europe, and South America. The most notable stocks in Mark Gallogly’s Centerbridge Partners’ 13F portfolio include Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN).
Our Methodology
This article discusses the 10 stocks to buy according to Mark T. Gallogly’s Centerbridge Partners. For this list, we collected data from Gallogly’s 13F portfolio as of Q2 2022.
Stocks to Buy According to Mark T. Gallogly’s Centerbridge Partners
10. Community Health Systems, Inc. (NYSE:CYH)
Centerbridge Partners’ Stake Value: $3,525,000
Percentage of Centerbridge Partners’ 13F Portfolio: 0.31%
Number of Hedge Fund Holders: 27
Community Health Systems, Inc. (NYSE:CYH) manages and runs hospitals. It runs general acute care hospitals and associated healthcare organisations that offer inpatient and outpatient medical services. Chuck Royce’s Royce & Associates is a remarkable stakeholder of Community Health Systems, Inc. (NYSE:CYH), with 1.77 million shares worth $3.81 million.
For the fiscal third quarter of 2022, Community Health Systems, Inc. (NYSE:CYH) reported a loss per share of $0.52, falling short of estimates by $0.50. In addition, the company’s revenue for the quarter came in at $3.03 billion, missing market estimates by $10 million.
Community Health Systems, Inc. (NYSE:CYH) was in 27 hedge funds’ portfolios at the end of the second quarter of 2022. There were 25 hedge funds in our database with Community Health Systems, Inc. (NYSE:CYH) at the end of the previous quarter.
Even though Mark T. Gallogly’s Centerbridge Partners slashed its stake in Community Health Systems, Inc. (NYSE:CYH) by 37% in the second quarter of 2022, it still owned 939,903 shares of the company, worth $3.53 million. Community Health Systems, Inc. (NYSE:CYH) has featured on Gallogly’s portfolio since the first quarter of 2020.
Community Health Systems, Inc. (NYSE:CYH) is one of the notable stock picks of Mark T. Gallogly’s Centerbridge Partners, just like Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN).
9. GDS Holdings Limited (NASDAQ:GDS)
Centerbridge Partners’ Stake Value: $11,353,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1%
Number of Hedge Fund Holders: 25
GDS Holdings Limited (NASDAQ:GDS) designs and manages data centres in the People’s Republic of China with its affiliates. As of the second quarter, Mark T. Gallogly’s Centerbridge Partners held an $11.35 million stake in GDS Holdings Limited (NASDAQ:GDS), which accounted for 1% of the firm’s Q2 investment portfolio.
At the end of the second quarter of 2022, 25 hedge funds in the database of Insider Monkey reported owning stakes in GDS Holdings Limited (NASDAQ:GDS), down from 26 funds in the previous quarter. The total value of these stakes is over $549.49 million. Joel Ramin’s 12 West Capital Management is the leading GDS Holdings Limited (NASDAQ:GDS) stakeholder, with 7.34 million shares valued at $244.96 million.
On August 26, GDS Holdings Limited (NASDAQ:GDS) was downgraded by RBC Capital analyst Jonathan Atkin to ‘Sector Perform’ from ‘Outperform’ with a $33 price objective, down from $41. Atkin claimed that his updated price prediction considered variables including a higher discount rate, elevated macroeconomic risk, Covid, and supply-chain elements.
Baron Funds, in its Q1 2022 investor letter, mentioned GDS Holdings Limited (NASDAQ:GDS). Here is what the fund said:
GDS is the leading developer and operator of data centers in China. Following several years of strong share price performance, the shares of GDS corrected sharply in 2021 due to investor concerns about China’s increased regulatory scrutiny of the technology industry and a slowdown in its economy, increased competition, evidence of further tensions with U.S. regulatory agencies, and a substantial correction in technology shares broadly. At our average purchase price of $39, we believe these concerns are sufficiently discounted in the shares and remain optimistic about the company’s long-term potential to generate strong growth and increase the intrinsic value of the business.…. “(Click here to read the full text).”
8. VectoIQ Acquisition Corp. II (NASDAQ:VTIQ)
Centerbridge Partners’ Stake Value: $19,149,000
Percentage of Centerbridge Partners’ 13F Portfolio: 1.69%
Number of Hedge Fund Holders: N/A
VectoIQ Acquisition Corp. II (NASDAQ:VTIQ) functions as a blank check company. Its goal is to complete a merger, stock exchange, asset acquisition, stock purchase, and restructuring. It was established on August 10, 2020. The company’s search efforts concentrate on the transportation, smart mobility, and industrial technology industries.
Steve Girsky, managing partner of VectoIQ Acquisition Corp. II (NASDAQ:VTIQ), has over 30 years of experience working with top corporate and board executives, OEM leaders, labour leaders, suppliers and dealers, as well as federal, state, and municipal legislators.
VectoIQ Acquisition Corp. II (NASDAQ:VTIQ) stands eighth on the list of 10 stocks to buy according to Mark T. Gallogly’s Centerbridge Partners, with the hedge fund owning 1.95 million shares worth $19.15 million. Centerbridge Partners is VectoIQ Acquisition Corp. II (NASDAQ:VTIQ)’s most significant stakeholder.
7. GoHealth, Inc. (NASDAQ:GOCO)
Centerbridge Partners’ Stake Value: $24,324,000
Percentage of Centerbridge Partners’ 13F Portfolio: 2.15%
Number of Hedge Fund Holders: 9
GoHealth, Inc. (NASDAQ:GOCO) is a platform for health insurance that provides Medicare plans and health insurance brokerage to individuals and corporations. In the second quarter of 2022, 9 out of the 895 hedge funds tracked by Insider Monkey held a stake in GoHealth, Inc. (NASDAQ:GOCO).
On August 26, Ben Hendrix of RBC Capital cut his price objective on GoHealth, Inc. (NASDAQ:GOCO) from $2 to $1 while maintaining a ‘Sector Perform’ rating. GoHealth’s Q2 performance, a revised growth strategy that puts profitability ahead of quick expansion, the company’s revisions to its FY22 expectations, and the termination of 800 sales reps ahead of the Annual Enrollment Period were all noted by the analyst.
Centerbridge Partners is the most significant shareholder of GoHealth, Inc. (NASDAQ:GOCO), with a stake worth $24.32 million as of the end of June 2022. Trailing Centerbridge Partners is D E Shaw, which amassed a stake valued at $2.28 million.
6. Garrett Motion Inc. (NASDAQ:GTX)
Centerbridge Partners’ Stake Value: $26,205,000
Percentage of Centerbridge Partners’ 13F Portfolio: 2.31%
Number of Hedge Fund Holders: 23
Finally, the sixth slot in Centerbridge’s 13F portfolio consisted of 3.39 million shares of Garrett Motion Inc. (NASDAQ:GTX), representing 2.31% of its portfolio. GTX is an auto parts company. Garrett Motion Inc. (NASDAQ:GTX) is working with a consultant on a potential sale while considering strategic options. Although no agreement is imminent, companies looking to enhance their electric car operations are expected to exhibit interest in Garrett.
Chuck Royce’s Royce & Associates is a prominent stakeholder of Garrett Motion Inc. (NASDAQ:GTX) as of September 30, increasing its stake in the company by 3% in Q3, holding 1.32 million shares worth almost $7.48 million.
By the end of the second quarter of 2022, Insider Monkey found Garrett Motion Inc. (NASDAQ:GTX) to be a part of 23 hedge fund portfolios. These funds’ total stakes in the firm are worth $2 billion, compared to $1.98 billion, with 20 positions in the previous quarter.
Apart from Garrett Motion Inc. (NASDAQ:GTX), Genco Shipping & Trading Limited (NYSE:GNK), and Cedar Fair, L.P. (NYSE:FUN) are notable companies that captured Centerbridge Partners’ interest.
Here is what Alluvial Capital Management specifically said about Garrett Motion Inc. (NASDAQ:GTX) in its Q3 2022 investor letter:
“Garrett Motion Inc. (NASDAQ:GTX) has elected to begin paying cash dividends on its convertible preferred shares. Doing so prevents dividends in arrears from further accruing and is a wise use of the company’s free cash flow. I believe the choice to initiate a cash dividend is a tacit admission by the company that the necessary conditions for converting the preferred shares will not be met soon. This is a mild short-term negative, as the complex capital structure will remain in place for now. On the other hand, I am thrilled for us to earn a 9% yield as the company uses its free cash flow to buy back cheap stock and wait for the automotive cycle to turn.”
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Disclosure: None. 10 Stocks to Buy According to Mark T. Gallogly’s Centerbridge Partners is originally published on Insider Monkey.