SHEL - Tracking Dan Loeb's Third Point Portfolio - Q2 2023 Update

2023-09-12 05:16:01 ET

Summary

• Dan Loeb's 13F portfolio value increased from $6.11B to $6.82B this quarter.
• The top three holdings account for approximately 31% of the entire portfolio.
• New stakes include Amazon, Taiwan Semi, Nvidia, and Intercontinental Exchange, among others.

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 8/14/2023. 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 Q1 2023.

This quarter, Loeb's 13F portfolio value increased from $6.11B to $6.82B. The 13F portfolio is very concentrated with the top three holdings accounting for ~31% of the entire portfolio. The number of holdings decreased from 46 to 45. 28 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, Danaher Corp, Amazon.com, Bath & Body Works, and Microsoft Corporation.

Third Point returned negative 3% in H1 2023 compared to 16.9% for the S&P 500 Index. Annualized returns since December 1996 inception are at 12.9% compared to 8.9% for the S&P 500 Index. 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 Investors ( 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 $85.20. The ESLOY investment was made in early 2019 when the stock was trading at ~$62.50 per share. It currently trades at ~$94. The NSRGY position is from 2017 and the stock has moved from ~$75 to ~$119 now.

New Stakes:

Amazon.com ( AMZN ), Taiwan Semi ( TSM ), Nvidia ( NVDA ), and Intercontinental Exchange ( ICE ): AMZN is a 7.83% of the portfolio position this quarter at prices between ~$98 and ~$130 and the stock currently trades above that range at $143. The 3.62% TSM stake was established this quarter at prices between ~$82 and ~$107 and it now goes for $89.60. NVDA is a 3.10% of the portfolio position purchased this quarter at prices between ~$262 and ~$438. The stock is now at ~$452. The ~3% ICE stake was established this quarter at prices between ~$104 and ~$113 and it now goes for ~$115.

Activision Blizzard ( ATVI ), Uber Technologies ( UBER ), Option Care Health (OPCH), and Horizon Therapeutics ( HZNP ): These small (less than ~2% of the portfolio each) stakes were established during the quarter. ATVI and HZNP are merger arbitrage stakes.

Stake Disposals:

Colgate-Palmolive ( CL ): CL was the second largest position at 13.59% of the portfolio as of last quarter. The bulk of the stake was built during Q3 2022 at prices between ~$69 and ~$83. The disposal this quarter was at prices between ~$74 and ~$82. The stock currently trades at ~$74.

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 last quarter saw a ~50% reduction at prices between ~$460 and ~$519. The elimination this quarter was at prices between ~$458 and ~$526. The stock currently trades at ~$479.

Salesforce ( CRM ): CRM was a 2.62% of the portfolio position purchased last quarter at prices between ~$135 and ~$200. The position was sold this quarter at prices between ~$189 and ~$223. The stock is now at ~$225.

National Instruments ( NATI ) and Teck Resources ( TECK ): These two small stakes established last quarter were disposed this quarter.

Stake Increases:

Bath & Body Works ( BBWI ): The large (top five) 7.61% of the portfolio stake in BBWI was established during Q3 2022 at prices between ~$26 and ~$41 and the stock currently trades at $36.46. There was a ~60% stake increase in the next quarter at prices between ~$31 and ~$44. The last two quarters saw a marginal increase.

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

Microsoft Corporation ( MSFT ): The 7.58% of the portfolio MSFT position was purchased during Q4 2022 at prices between ~$214 and ~$257 and it is now at ~$338. There was a ~45% stake increase this quarter at prices between ~$275 and ~$348.

DuPont De Nemours ( DD ): The 4.82% of the portfolio stake in DD was established in Q1 2021 at prices between ~$69 and ~$86 and it is now at $75.43. 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 in the next quarter there was a similar increase at prices between ~$50 and ~$72. The last quarter saw a one-third further increase at prices between ~$68 and ~$78. That was followed by a ~15% further increase this quarter.

Alibaba Group Holding ( BABA ): The 3.60% BABA stake was established last quarter at prices between ~$81 and ~$121 and the stock currently trades at $88.71. There was a ~120% stake increase this quarter at prices between ~$79 and ~$103.

International Flavors & Fragrances ( IFF ): IFF is a ~3% of the portfolio stake established during Q4 2022 at prices between ~$85 and ~$108 and it is now well below that range at $68.34. There was a ~15% stake increase over the last two quarters.

Hertz Global ( HTZ ): The 2.42% HTZ position was purchased during Q4 2021 at prices between ~$19 and ~$35 and it is now at $16.25. The three quarters through Q4 2022 saw a ~10% reduction at prices between ~$16 and ~$25 while the last two quarters saw the stake doubled at prices between ~$15 and ~$20.

Advanced Micro Devices ( AMD ), Denbury ( DEN ), Jacobs Solutions ( J ), Micron Technology ( MU ), Vistra Corp. ( VST ), and Wesco International ( WCC ): These small (less than ~2.5% of the portfolio each) stakes were increased during the quarter.

Stake Decreases:

PG&E Corp. ( PCG ) & Units: PCG is currently the largest 13F stake at ~15% 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. There was a ~9% trimming this quarter. The stock currently trades at $16.90.

Danaher Corp. ( DHR ): The top three ~9% 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 ~$250. The last few quarters saw only minor adjustments.

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

Alphabet Inc. ( GOOG ) and HCA Healthcare ( HCA ): GOOG is a 2.50% of the portfolio position purchased last quarter at prices between ~$87 and ~$109. This quarter saw a ~70% reduction at prices between ~$104 and ~$128. The stock currently trades at ~$138. HCA is a 2.67% of the portfolio position established last quarter at prices between ~$243 and ~$264. This quarter saw a ~30% reduction at prices between ~$264 and ~$304. The stock currently trades at ~$272.

Global Blue ( GB ) : The very small 0.61% stake in GB saw marginal trimming this quarter.

Kept Steady:

Ferguson plc ( FERG ): FERG is a ~3% of the portfolio position purchased during Q3 2022 at prices between ~$103 and ~$128 and the stock is now at ~$156. There was a ~40% stake increase last quarter at prices between ~$128 and ~$150.

American International Group ( AIG ): AIG is a 2.49% of the portfolio stake established during Q4 2022 at prices between ~$48 and ~$64 and the stock currently trades at $59.69. There was a ~42% selling last quarter at prices between ~$47 and ~$65.

The spreadsheet below highlights changes to Loeb's 13F stock holdings in Q2 2023:

For further details see: