Mitchell Julis and Joshua Friedman’s Canyon Capital was up in their flagship strategy in August, according to a investor letter seen by ValueWalk. After gaining +0.18 percent in August, returns on Canyon Value Realization Fund are now up 9.94 percent YTD. This is much better than other credit hedge funds. We also featured CVRF in the best performing credit funds of the year so far in an earlier post. While this is not CVRF’s best return of the year, it still outperformed the benchmark indices. Credit Suisse Leveraged Loan Index was up 0.04 percent, whereas Barclays U.S. Corporate HY Bond Index was down 0.6 percent in the same period.
Canyon Value fund up in all asset classes
Canyon Value Realization Fund, which manages $5.7 billion, was able to remain up in the otherwise turbulent markets of August, with low exposure to interest rates. The fund was able to generate returns in all of its asset classes. Canyon was able to profit from the loans of a Spanish commercial real estate company, which sold its position in a French real estate company. The sale caused the loans to trade up.
Canyon has been gaining in its RMBS/MBS portfolio, as well as recoveries from default which will continue to produce healthy returns. The fund expects more returns even if housing prices do not increase in parallel.
In the distressed debt portfolio, Canyon has gained from claims on a liquidating investment bank and also from the loan of a gaming company, which is undergoing asset sales. At the same time, the fund has detracted in the distressed loans of another gaming company that has come out of bankruptcy.
Canyon Value fund up in Cumulus Media
In equities, Canyon continues to gain from a media company which it calls its second largest position. Canyon holds a large position in Cumulus Media Inc (NASDAQ:CMLS), and shares of the company were up 12 percent in the last month. Cumulus has successfully bought a sports network, Dial Global Inc (OTCMKTS:DIAL), in the last month and also bought and sold other radio stations, so we are guessing that this is the ‘best performing position’ that Canyon is talking about. Canyon’s other equity positions were down in the last month, but gains from the unnamed media company were enough to offset the losses.
Canyon’s other top holdings, according to the 13f filing, include Ambac Financial Group, Inc. (OTCMKTS:ABKFQ), Apple Inc. (NASDAQ:AAPL), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) and Berry Plastics Group Inc (NYSE:BERY).
The only asset class that the fund lost in was municipal bonds; the letter notes that the market is marred by negative sentiment after Detroit filed for bankruptcy.