Third Point's form 13F filed on February 14th highlights recent stocks purchases including Alphabet Inc Class A (Nasdaq: GOOGL), Intercontinental Exchange Inc (NYSE: ICE), and Netflix, Inc. (Nasdaq: NFLX).
Activist Investing: Creating the Catalyst to Unlock Value
Third Point’s website defines its investment approach as flexible and opportunistic, as well as event-driven and value-oriented. It goes on to say that
“the firm seeks to identify situations where we anticipate a catalyst will unlock value.”
Very often the catalyst is Daniel Loeb and his shareholder activism. He looks for companies that are in trouble, and that he believes are badly managed. He likes to buy enough stock to gain influence, and then convince other shareholders to push for changes in management and strategy.
This shareholder activism invites controversy. Loeb often finds himself in the media defending his position and is not afraid to get into public arguments with those he disagrees with. Warren Buffett, George Clooney, the CEOs of Sony and Yahoo, and fellow activist investor Bill Ackman have all found themselves on the receiving end of his verbal attacks.
Third Point's 7 Largest Purchases
On February 14th, Daniel Loeb's firm Third Point filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm's large portfolio.
Third Point's stock portfolio totals $13.9 billion according to the latest filing. The list value of stock holdings is up 16.5% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Third Point page.
Here's the list of the biggest stock purchases determined by comparing the last two filings:
| Ticker | Name | Purchased ($mil) | % Of Portfolio |
|---|---|---|---|
| Nasdaq:GOOGL | Alphabet Inc | $395.0 | 5.2% |
| NYSE:ICE | Intercontinental Exchange Inc | $388.1 | 2.8% |
| Nasdaq:NFLX | Netflix, Inc. | $383.9 | 2.8% |
| NYSE:LEN | Lennar Corporation | $335.2 | 2.4% |
| NYSE:AET | Aetna Inc | $333.7 | 2.4% |
| NYSE:TWX | Time Warner Inc | $297.3 | 4.0% |
| Nasdaq:XRAY | DENTSPLY SIRONA Inc | $131.7 | 1.0% |
Five out of the seven stock purchases above were also new positions made by Daniel Loeb's Third Point.
The largest stock purchase for the quarter was Alphabet Inc. (Nasdaq: GOOGL). Third Point increased its position in the company by $395.0 million and the stock now represents 5.2% of the firm's portfolio.
The next largest stock purchase was Intercontinental Exchange (NYSE: ICE). This was also a new position for the investment manager. It purchased a new $388.1 million position that now represents 2.8% of the firm's portfolio.
The third largest stock purchase was also a new position. Mr. Loeb's $383.9 million addition of Netflix (Nasdaq: NFLX) now represents 2.8% of the firm's portfolio.
The next largest stock purchase was Lennar Corporation (NYSE: LEN). The investment manager purchased a new $335.2 million position in the homebuilder in the fourth quarter.
The fifth largest stock purchase was Aetna Inc. (NYSE: AET). Third Point's $333.7 million equity purchase was a new position for the hedge fund and now represents 2.4% of its portfolio.
The sixth largest stock purchase for the quarter was Time Warner Inc. (NYSE: TWX). Third Point increased its position in the company by $297.3 million. Mr. Loeb now 6,000,000 million shares of the media giant worth nearly $550 million.
The seventh largest stock purchase for the quarter was DENTSPLY SIRONA Inc (Nasdaq: XRAY). Third Point added a new $131.7 million position in the dental care manufacturer.
Why Third Point's Worth Following
Daniel Loeb has made a name for himself generating impressive, and consistent, returns over the last two decades. In the process he has amassed a fortune of $3.2 billion, putting him at number 240 on the Forbes 400 list.
Loeb founded Third Point in 1995 and now runs two hedge funds. He started the company with $3.3 million from family and friends, in office space borrowed from David Tepper’s Appaloosa Capital. The Third Point Offshore Limited fund has generated annual returns of 15.8% since inception (1996) while the Ultra Limited fund has generated returns of 23.7% since its inception in 1997. This compares favorably to the S&P500 which has averaged less than 8% per year since 1997.
With these types of returns, investors would be wise to take a closer look his holdings mentioned above. However, it is important to note that these filings are due 45 days after the quarter end date. Therefore, Loeb's holdings above represent positions held as of December 31st and not necessarily reflective of the fund's current stock positions. Nevertheless, the firm's QoQ Turnover is not unreasonably high meaning it's likely worth following his investments.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron's, Seeking Alpha and investing.com.
Matt can be reached at [email protected].
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.
