Analyzing Anchor Bolt Capital, LP's Holdings: A Closer Look at Q4 2019 and Q1 2020 Changes

Anchor Bolt Capital, LP is one of the many hedge funds that file their quarterly 13F forms with the Securities and Exchange Commission (SEC). The fund filed its Q4 2019 and Q1 2020 forms – which cover the last two months of 2019 and the first three months of 2020 respectively – and the results showed some notable changes in the fund’s holdings. In this post, we will take a closer look at the changes in Anchor Bolt Capital, LP’s holdings between Q4 2019 and Q1 2020.

Anchor Bolt Capital, LP's Top Ten Holdings

The first thing to notice when analyzing the holdings of Anchor Bolt Capital is that the number of stocks held by the fund dropped from 29 to 24 between Q4 2019 and Q1 2020. The total amount of assets under management (AUM) also fell during this period from $1.07 billion to $695 million. The fund's top ten holdings in both quarters show six stocks in common: Graphic Packaging Holding Company (GPK), Gold Fields Ltd. (GFI), Berry Global Group Inc. (BERY), Cheniere Energy Inc. (LNG), Arch Coal Inc. (ARCH), and Eldorado Gold Corp. (ELD.TO).

Despite having the same top ten holdings, there were some notable changes in the number of shares held by Anchor Bolt Capital between these two quarters. For example, the number of shares held in GPK fell from 891,940 to 203,405, a decrease of 77.2%. Similarly, the number of shares held in BERY fell by 92.7%, from 759,657 to 55,214.

Anchor Bolt Capital's Biggest Winners and Losers

As we dig deeper into the difference in holdings between Q4 2019 and Q1 2020, we can see some obvious winners and losers in the portfolio. The biggest loser, in terms of percentage change, was Arch Coal Inc., which saw its shares held by Anchor Bolt Capital fall by 89.8%, from 188,370 to 47,819. The next biggest loser was Graphic Packaging Holding Company, which saw a fall in shares held of 77.2%, from 891,940 to 203,405.

On the other hand, Nextera Energy Partners LP was the biggest winner in the fund's new holdings, with 5,002 shares added during the period. This represents a 100% change, since Anchor Bolt Capital held no shares in the company in Q4 2019. The second biggest winner was United Rentals Inc., with 8,673 shares added during the period, an increase of 91.4%.

Gold Fields Ltd. was another winner during the period, with Anchor Bolt Capital adding 3,166 shares, representing an increase of 12.3%. However, this was a rare positive change in the mining sector for the fund since the other two mining companies in its holdings – Turquoise Hill Resources Ltd. (TRQ) and Pretium Resources Inc. (PVG) – both saw their shares held decrease by over 90% between the two quarters.

The Impact of COVID-19 on Anchor Bolt Capital's Holdings

It is interesting to note that some of the companies in Anchor Bolt Capital's holdings that suffered the biggest decreases in share holdings were in the travel and tourism sector. United Airlines Holdings. (UAL), Delta Air Lines Inc. (DAL), Norwegian Cruise Line Holdings Ltd. (NCLH), and Royal Caribbean Cruises Ltd. (RCL) all had all of their shares liquidized between Q4 2019 and Q1 2020, as air travel and cruise line industries were hit hard by the COVID-19 pandemic. The full impact of the pandemic on the investments of hedge funds like Anchor Bolt Capital will only become apparent as the year progresses.

Conclusion

The change in holdings for Anchor Bolt Capital, LP between Q4 2019 and Q1 2020 was characterized by a significant decrease in the number of shares held, and signs of weakness in the mining and travel industries. However, there were still some notable winners, including Nextera Energy Partners LP, United Rentals Inc., and Gold Fields Ltd. While it remains to be seen how the COVID-19 pandemic will continue to impact the investments of hedge funds like Anchor Bolt Capital in the coming months, it is clear that the fund will need to remain nimble in order to adapt to the challenges posed by the current market conditions.