AIG - Tracking Dan Loeb's Third Point Portfolio - Q1 2023 Update

2023-06-08 23:10:34 ET

Summary

• Dan Loeb's Third Point increased its 13F portfolio value to $6.11B in Q1 2023, with top three holdings accounting for around 41% of the entire portfolio.
• New stakes were established in Alphabet Inc., HCA Healthcare, Salesforce, and Alibaba Group Holding during the quarter.
• The largest five individual stock positions are PG&E, Colgate-Palmolive, Danaher Corp, Bath & Body Works, and Alphabet.

This article is part of a series that provides an ongoing analysis of the changes made to Dan Loeb's 13F stock portfolio on a quarterly basis. It is based on Third Point's regulatory 13F Form filed on 5/15/2023. Please visit our Tracking Dan Loeb's Third Point Portfolio series to get an idea of their investment philosophy and our last update for the fund's moves during Q4 2022.

This quarter, Loeb's 13F portfolio value increased from $5.97B to $6.11B. The 13F portfolio is very concentrated with the top three holdings accounting ~41% of the entire portfolio. The number of holdings increased from 44 to 46. 23 of the holdings are significantly large (more than ~0.5% of the portfolio each) and they are the focus of this article. The largest five individual stock positions are PG&E, Colgate-Palmolive, Danaher Corp., Bath & Body Works, and Alphabet.

Third Point returned negative 4.1% in Q1 2023 compared to 7.5% for the S&P 500 Index. Annualized returns since December 1996 inception are at 13% compared to 8.6% for the S&P 500 Index. AUM is distributed among several strategies of which the long/short equity portion is roughly ~46%. In addition to partner stakes, Third Point also invests in the float of SiriusPoint ( SPNT ) and capital from London listed closed-end fund Third Point Offshore ( OTCPK:TPNTF ). To know more about Dan Loeb's Third Point, check out his letters to shareholders at their site. His activist investing style is covered in the book " The Alpha Masters: Unlocking the genius of the world's top hedge funds ".

Note 1: They have a significant portfolio of investments through their venture firm Third Point Ventures .

Note 2: Large equity investments not in the 13F report include UBS Group AG ( UBS ), Shell plc ( SHEL ), Glencore plc ( OTCPK:GLNCY ), Sony ( SONY ), EssilorLuxottica ( OTCPK:ESLOY ), and Nestle ( OTCPK:NSRGY ). The UBS stake was built after the transaction for Credit Suisse was announced. The Shell stake was built over the three quarters through Q1 2022 while the Glencore plc position was established during Q1 2022. SONY is a $1.5B investment made in June 2019 when the stock was trading at around $50 per share. It is currently at $97.41. The ESLOY investment was made in early 2019 when the stock was trading at ~$62.50 per share. It currently trades at ~$91. The NSRGY position is from 2017 and the stock has moved from ~$75 to ~$119 now.

New Stakes:

Alphabet Inc. ( GOOG ), HCA Healthcare ( HCA ), Salesforce ( CRM ), and Alibaba Group Holding ( BABA ): GOOG is a large (top five) ~8% of the portfolio position purchased this quarter at prices between ~$87 and ~$109 and the stock currently trades well above that range at ~$123. The 3.71% HCA stake was established at prices between ~$243 and ~$264 and it is now at ~$274. CRM is a 2.62% of the portfolio position purchased at prices between ~$135 and ~$200 and the stock is now at ~$210. The 2.22% BABA stake was established at prices between ~$81 and ~$121 and the stock currently trades at $86.14.

National Instruments ( NATI ), Advanced Micro Devices ( AMD ), WESCO International ( WCC ), Micron Technology ( MU ), Vistra Corp. ( VST ), and Teck Resources ( TECK ): These small (less than ~2% of the portfolio each) stakes were established during the quarter.

Stake Disposals:

TJX Companies ( TJX ): TJX was a 3.53% of the portfolio position purchased during Q3 2022 at prices between ~$56 and ~$69. There was a ~50% stake increase last quarter at prices between ~$62 and ~$81. The disposal this quarter was at prices between ~$73 and ~$83. The stock is now at $77.76.

SentinelOne ( S ): SentinelOne stake was from 2015 when they led the Series B funding round at a post-money valuation of $98M. They participated in each subsequent round as well as the IPO and after-market. There was a ~10% trimming in Q3 2022 in the mid-20s price range and that was followed with a ~25% reduction last quarter at prices between ~$13 and ~$28. The elimination this quarter was at prices between ~$13 and ~$16. The stock currently trades at ~$15 at a valuation of ~$3.3B - their initial 2015 investment returned a stunning ~35x.

Walt Disney ( DIS ): DIS was a 1.38% of the portfolio stake established in Q2 2022 at prices between ~$93 and ~$139 and it now goes for $92.53. There was a ~40% stake reduction during Q3 2022 at prices between ~$92 and ~$125. Last quarter saw a one-third stake increase at prices between ~$84 and ~$107. The disposal this quarter was at prices between ~$89 and ~$113.

Ventyx Biosciences ( VTYX ) : The VTYX stake was reduced to a very small 0.55% of the portfolio stake last quarter primarily through a block sale at ~$26 per share. The remainder stake was sold this quarter. The stock is now at $34.83.

Note: The original investment was made in 2016 in a Series-B funding round in Opillan at a valuation of ~$20M. Opillan got consolidated into Ventyx.

Fidelity National Information Services ( FIS ), and Laboratory Corp. ( LH ): The 2.27% FIS position was purchased last quarter at prices between ~$57 and ~$85. It was disposed this quarter at prices between ~$50 and ~$77. It is now at $54.49. LH was a small 0.76% of the portfolio stake established last quarter but disposed this quarter.

Ovintiv Inc. ( OVV ): OVV was a 3.40% of the portfolio position purchased in Q1 2022 at prices between ~$35 and $55 and increased by ~175% next quarter at prices between ~$42 and ~$62. Q3 2022 saw a one-third reduction at prices between ~$40 and ~$55. That was followed with the elimination this quarter at prices between ~$33 and ~$52. The stock currently trades at ~$38.

Jaws Mustang Acquisition (JWSM) : The very small 0.67% stake in JWSM was disposed during the quarter.

Stake Increases:

PG&E Corp. ( PCG ) & Units: PCG is currently the largest 13F stake at ~17% of the portfolio. The position came about as a result of participating in a PIPE (terms for the bankruptcy exit financing in 2020 called for up to $10.50 per share purchase price). The last several quarters saw only minor adjustments. The stock currently trades at ~$17.

Danaher Corp. ( DHR ): The top three ~11% DHR stake was established in Q3 2015 at prices between $60.90 and $71.50 and increased by two-thirds in Q1 2016 at prices between $62 and $74. There was a ~20% stake increase in Q1 2019 at prices between $98 and $132 while H1 2020 saw a ~20% selling at prices between $129 and $177. H1 2022 had seen another similar reduction at prices between ~$237 and ~$316. There was a ~17% stake increase during Q3 2022 at prices between ~$247 and ~$302. It currently trades at ~$235. This quarter saw a marginal increase.

Note: The prices quoted above are adjusted for the Fortive ( FTV ) spin-off in July 2016.

Bath & Body Works ( BBWI ): The large (top five) 8.23% of the portfolio stake in BBWI was established last quarter at prices between ~$26 and ~$41 and the stock currently trades at ~$42. There was a ~60% stake increase last quarter at prices between ~$31 and ~$44. This quarter saw a marginal increase.

Note: They have a ~6% ownership stake in the business.

DuPont de Nemours ( DD ): The 4.70% of the portfolio stake in DD was established in Q1 2021 at prices between ~$69 and ~$86 and it is now at $70.44. There was a ~11% stake increase in Q4 2021 while the next quarter saw similar trimming. Q3 2022 saw a ~23% selling at prices between ~$50 and ~$63 while last quarter there was a similar increase at prices between ~$50 and ~$72. This quarter saw a one-third further increase at prices between ~$68 and ~$78.

International Flavors & Fragrances ( IFF ): IFF is a ~4% of the portfolio stake established last quarter at prices between ~$85 and ~$108 and it is now at ~$80. There was a ~11% stake increase this quarter.

Ferguson plc ( FERG ): FERG is a 2.79% of the portfolio position purchased during Q3 2022 at prices between ~$103 and ~$128 and the stock is now well above that range at ~$145. There was a ~40% stake increase this quarter at prices between ~$128 and ~$150.

Hertz Global ( HTZ ): The 1.69% HTZ position was purchased during Q4 2021 at prices between ~$19 and ~$35 and it is now at $17.40. The last three quarters saw a ~10% reduction at prices between ~$16 and ~$25 while this quarter there was a ~19% increase at prices between ~$15 and ~$20.

Stake Decreases:

Colgate-Palmolive ( CL ): CL is now the second largest position at 13.59% of the portfolio. A small position was established in Q2 2022 at prices between ~$74 and ~$82. The bulk of the current stake was built next quarter at prices between ~$69 and ~$83. The stock currently trades at $75.73. There was a minor ~4% trimming this quarter.

Note: Colgate Palmolive is an activist stake. Third Point pushed for a spinoff of its Hill Pet Nutrition business saying it could have a valuation of ~$20B. In February, Colgate CEO said the company was pleased with the categories it competes in, including the Hill's Pet Nutrition business.

American International Group ( AIG ) and Microsoft Corporation ( MSFT ): AIG is a 2.43% of the portfolio stake established last quarter at prices between ~$48 and ~$64 and the stock currently trades at $56.63. There was a ~42% selling this quarter at prices between ~$47 and ~$65. The fairly large ~5% of the portfolio MSFT position was purchased last quarter at prices between ~$214 and ~$257 and it is now at ~$325. This quarter saw a ~11% trimming.

UnitedHealth ( UNH ) : The 2.59% UNH position was purchased during Q4 2020 and Q1 2021 at prices between ~$305 and ~$377. Q1 2022 saw a ~23% selling at prices between ~$456 and ~$521. The next quarter saw a ~6% trimming while in Q3 2022 there was a ~18% stake increase. The stock currently trades at ~$490. This quarter saw a ~50% reduction at prices between ~$460 and ~$519.

Kept Steady:

Global Blue ( GB ) : The very small 0.85% stake in GB was kept steady this quarter.

The spreadsheet below highlights changes to Loeb's 13F stock holdings in Q1 2023:

For further details see: