Shifting Priorities: Brigade Capital Management, LP Q3 2022 vs. Q4 2022 Holdings

Brigade Capital Management, LP, a New York-based hedge fund, recently released its quarterly 13F filing highlighting the fund's holdings for Q3 2022 and Q4 2022. The filing shows significant changes in the fund's portfolio with some holdings experiencing a surge in value while some were reduced or dropped entirely. In this article, we will examine the highlights of Brigade Capital Management, LP's holdings to understand the reasons behind the changes and what it means for the industry.

One of the most significant changes in Brigade Capital Management, LP's portfolio is the reduction of their holdings in iShares TR's LQD. The fund held 2 million shares worth $204.9 thousand in Q3 2022, which were reduced to only 1.5 million shares valued at $158.1 thousand in Q4 2022. The reduction in shares represents a 22.8% decline and shows a loss of confidence in the company during the quarter.

Another notable change is the equal holdings in VAL's Valaris Limited. The fund held 613,690 shares in both quarters, but the value surged from $30,040 thousand in Q3 2022 to $41,497 thousand in Q4 2022. This increase represents a 38.1% jump in value, which could be due to improved quarterly performance or renewed confidence in the oil and gas industry on a global scale.

Meanwhile, three holdings were dropped entirely in the Q4 2022 filing. Western Asset Mortgage Capital, Liberty Latin America Ltd, and Valaris Limited (in its Warrant Shares) were all removed from the portfolio. This move shows a shift in the fund's priorities as they move away from these companies - whether it is due to poor performance or reallocation of resources, it is currently unclear.

It is also worth noting that Brigade Capital Management, LP purchased new positions in several holdings, with MagnaChip Semiconductor Corp (NYSE: MX) being the most significant, increasing from 73,500 shares in Q3 2022 to 599,000 shares in Q4 2022. This purchase represents a significant investment shift (up 647%), signaling the fund's optimistic outlook on the semiconductor industry going into 2022.

In contrast, the fund disposed of every single share of ETFs, such as SPDR S&P 500 ETF TR (NYSE: SPY) and iShares TR (NYSE: IWM), which shows a disinterest in exchange-traded funds across both large and small-cap companies.

In conclusion, Brigade Capital Management, LP's Q3 2022 vs. Q4 2022 13F filing highlights that the fund is adjusting its portfolio, with moves towards shares in the semiconductor industry while reducing stocks in well-known positions such as iShares TR and Liberty Media Corp. The fund's rationale behind these decisions isn't clear at this time, but it is possible that the firm is moving towards higher-risk investments.