BBWI - Tracking Dan Loeb's Third Point Portfolio - Q4 2022 Update

2023-03-20 08:57:38 ET

Summary

• Dan Loeb's 13F portfolio value increased from $5.53B to $5.97B this quarter. The number of positions decreased from 61 to 44.
• Third Point added American International Group, Microsoft, and International Flavors & Fragrances while dropping Cano Health, EQT Corp, Range Resources, and T-Mobile US.
• The top three positions are at ~43% of the portfolio: PG&E, Colgate-Palmolive, and Danaher Corp.

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 2/14/2023. 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 Q3 2022.

This quarter, Loeb's 13F portfolio value increased ~8% from $5.53B to $5.97B. The 13F portfolio is very concentrated with the top three holdings accounting ~43% of the entire portfolio. The number of holdings decreased from 61 to 44. 21 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 UnitedHealth.

Third Point returned negative 21.70% in 2022 compared to negative 18.10% for the S&P 500 Index. For 2023 through February, they were again down 3.4% compared to up 3.7% for the S&P 500 index. Annualized returns since December 1996 inception are at 13.3% compared to 8.4% for the S&P 500 Index. AUM is distributed among several strategies of which the long/short equity portion is roughly ~57%. 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 Shell plc ( SHEL ), Glencore plc ( OTCPK:GLNCY ), Sony ( SONY ), EssilorLuxottica ( OTCPK:ESLOY ), and Nestle ( OTCPK:NSRGY ). 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 $86.52. The ESLOY investment was made in early 2019 when the stock was trading at ~$62.50 per share. It currently trades at ~$85. The NSRGY position is from 2017 and the stock has moved from ~$75 to ~$118 now.

New Stakes:

American International Group ( AIG ), Microsoft Corporation ( MSFT ), International Flavors & Fragrances ( IFF ), Fidelity National Information Services ( FIS ), and Laboratory Corp. ( LH ): AIG is a large 5.40% of the portfolio stake established this quarter at prices between ~$48 and ~$64 and the stock currently trades just below that range at $47.24. The 4.74% of the portfolio MSFT position was purchased at prices between ~$214 and ~$257 and it is now at ~$279. IFF is a ~4% of the portfolio stake established at prices between ~$85 and ~$108 and it is now just below that range at $82.76. The 2.27% FIS position was purchased at prices between ~$57 and ~$85 and it is now well below that range at $51.64. LH is a small 0.76% of the portfolio stake established at prices between ~$204 and ~$249 and it now goes for ~$213.

Stake Disposals:

Twitter Inc.: Twitter was a fairly large 4.36% merger-arbitrage stake. It got eliminated as Twitter was taken private at $54.20 per share.

Range Resources ( RRC ): The 1.78% RRC stake was established last quarter at prices between ~$23.50 and ~$35. The elimination this quarter was at prices between ~$24 and ~$30. The stock currently trades at $22.88.

T-Mobile US ( TMUS ): The 1.70% TMUS position was purchased in Q2 2022 at prices between ~$122 and ~$139. The position was increased by ~45% last quarter at prices between ~$132 and ~$147. The disposal this quarter was at prices between ~$132 and ~$152. It currently trades at ~$142.

EQT Corp. ( EQT ): The 2.39% EQT stake was established in Q4 2021 at prices between ~$18 and ~$23 and increased by ~80% next quarter at prices between ~$20 and ~$36. The position was eliminated this quarter at prices between ~$33 and ~$45. The stock currently trades at $29.37.

CSX Corporation ( CSX ): CSX is a 1.32% of the portfolio position purchased in Q1 2022 at prices between ~$33 and ~$38. It was sold down by roughly one-third next quarter at prices between ~$28.75 and ~$37.50. That was followed with a ~45% selling last quarter at prices between ~$26.50 and ~$34.50. The disposal this quarter was at prices between ~$26.50 and ~$33. The stock currently trades at $28.91.

Antero Resources ( AR ): The AR stake was purchased in Q2 2022 at prices between ~$30.50 and ~$48. It was sold down to a minutely small stake last quarter at prices between ~$29 and ~$43. The elimination this quarter was at prices between ~$29 and ~$39. It is now at $21.69.

Avanti Acquisition, Cano Health ( CANO ), Comstock Resources ( CRK ), Perimeter Solutions SA ( PRM ), and Take-Two Interactive ( TTWO ): These small (less than ~2% of the portfolio each) stakes were disposed during the quarter.

Stake Increases:

Bath & Body Works ( BBWI ): The large (top five) 9.71% of the portfolio stake in BBWI was established last quarter at prices between ~$26 and ~$41 and the stock currently trades at $34.43. There was a ~60% stake increase this quarter at prices between ~$31 and ~$44.

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

TJX Companies ( TJX ): TJX is a 3.53% of the portfolio position purchased last quarter at prices between ~$56 and ~$69 and the stock currently trades above that range at $74.48. There was a ~50% stake increase this quarter at prices between ~$62 and ~$81.

DuPont De Nemours ( DD ): The 3.45% of the portfolio stake in DD was established in Q1 2021 at prices between ~$69 and ~$86 and it is now just below that range at $67.55. There was a ~11% stake increase in Q4 2021 while the next quarter saw similar trimming. Last quarter saw a ~23% selling at prices between ~$50 and ~$63 while this quarter there was a similar increase at prices between ~$50 and ~$72.

Stake Decreases:

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 four quarters have seen minor trimming. The stock currently trades at $16.10.

SentinelOne ( S ): SentinelOne is now at 3.59% of the portfolio. The stake goes back to 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. The stock currently trades at ~$15.07 at a valuation of ~$3.7B - their initial 2015 investment has so far returned a stunning ~35x. There was a ~10% trimming last quarter in the mid-20s price range and that was followed with a ~25% reduction this quarter at prices between ~$13 and ~$28.

Note: Regulatory filings since the quarter ended show them owning 10.15M shares (4.43% of business). This is compared to 14.7M shares in the 13F report.

Walt Disney ( DIS ): DIS is a 1.38% of the portfolio stake established in Q2 2022 at prices between ~$93 and ~$139 and it now goes for ~$93.20. There was a ~40% stake reduction last quarter at prices between ~$92 and ~$125. This quarter saw a one-third stake increase at prices between ~$84 and ~$107.

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

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.

Kept Steady:

Colgate-Palmolive ( CL ): CL is now the second largest position at ~15% of the portfolio. A small position was established in Q2 2022 at prices between ~$74 and ~$82. The stake was built last quarter at prices between ~$69 and ~$83. The stock currently trades at $72.20.

Note: Colgate-Palmolive is an activist stake. Dan Loeb is pushing for a spinoff of its Hill Pet Nutrition business. He believes that unit could have a valuation of ~$20B.

Danaher Corp. ( DHR ): The top three ~12% 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 last quarter at prices between ~$247 and ~$302. It currently trades at ~$243.

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

UnitedHealth ( UNH ) : The large ~6% 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 the last quarter there was a ~18% stake increase. The stock currently trades at ~$470.

Ovintiv Inc. ( OVV ): OVV is 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. Last quarter saw a one-third reduction at prices between ~$40 and ~$55. The stock currently trades at ~$34.

Ferguson plc ( FERG ): FERG is a ~2% of the portfolio position purchased last quarter at prices between ~$103 and ~$128 and the stock is now at ~$128.

Hertz Global ( HTZ ): The 1.57% HTZ position was purchased during Q4 2021 at prices between ~$19 and ~$35 and it is now below the low end of that range at $15.38. The last three quarters had seen a ~10% reduction at prices between ~$16 and ~$25.

Global Blue ( GB ) and Jaws Mustang Acquisition (JWSM) : These small (less than ~2% of the portfolio each) stakes were kept steady this quarter.

The spreadsheet below highlights changes to Loeb's 13F stock holdings in Q4 2022:

For further details see: