James Dinan’s York Capital Management focuses on distressed assets and invests around special situations. York Capital would be getting a sure boost from the recent deal struck between NRG Energy Inc (NYSE:NRG) and Edison Mission Energy. Edison Mission is the fourth-largest long position of York Total Return Fund and takes up 1.8 percent of the fund’s portfolio.
NRG Energy buys bankrupt Edison Mission
Edison Mission, the bankrupt unit of Edison International (NYSE:EIX), will have most of its assets taken over by NRG in a $2.64 billion deal, reports Bloomberg. NRG Energy will be buying Edison’s coal plants and wind farms, and the deal is expected to close in the first quarter of 2014. It will be paid through both shares of NRG and cash. NRG Energy is the largest electricity producer in the U.S.
York Capital buys vessels in a new joint venture
Recently, the investment firm got into an agreement with Augustea Bunge Maritime Limited to form a company that will operate a fleet of dry-bulk vessels. For now, the joint venture between York Capital and ABML, ABY Holding Limited, has two ships in service and another three that are being assembled in Japan.
Augustea Bunge Maritime Limited is also a joint venture of Bunge Ltd (NYSE:BG) and Augustea Atlantica S.p.A., an Italy-based company that has sea-transportation business across Europe. The new joint venture, ABY Holding is, however, based in Malta.
York Total Return up 9 percent YTD, +1.7 percent in September
While York Capital is investing in new ventures, the group’s hedge funds are also doing well. York Total Return was up 1.7 percent in September, bringing returns for the three quarters to +9.2 percent. York Total Return invests in several of York Capital’s other funds, with its highest exposure in York Credit Opportunities and York Multi Strategy, each of which has returned 1.7 percent (9.1 percent YTD) and 2.1 percent (10.2 percent YTD) in the last month, respectively.
York Total Return manages $1.5 billion, and has roughly 7 percent of its assets invested in Lehman Brothers. As we have mentioned in several articles, entities of Lehman Brothers have been a major source of profits for some of the big money managers. Just a few weeks ago, Paul Singer’s Elliott Management bought more Lehman claims, which could be worth $2 billion. Seth Klarman’s Baupost Group has been getting richer with liquidations from Lehman debt for several quarters now.
The fund’s second-largest position is in Kaupthing Bank, an Icelandic bank which was taken over by the government during the financial crisis and now operates as Arion Banki. Other top holdings include Ageas SA (OTCMKTS:AGESY) (EBR:AGS), a Belgian insurance company and Hertz Global Holdings, Inc. (NYSE:HTZ).
Dinan has previously disclosed that York is shorting the debt of J.C. Penney Company, Inc. (NYSE:JCP), though it is unclear if the fund is still betting against the company. If it is, it should be doing well because JCP hits a new level of lows every day. The fund also has a major short position in the equity of an undisclosed consumer discretionary company.
By asset class, York Total Return’s highest net exposure is in equities and bonds. The fund has net short exposure in CDS.