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 08/17/2020. 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 2020.
The 13F portfolio is very concentrated, with the top three holdings accounting for ~24% of the entire portfolio. Recent 13F reports show around 35 long positions. This quarter, Loeb’s 13F portfolio value increased ~17%, from $6.27B to $7.30B. The number of holdings increased from 30 to 36. The largest five individual stock positions are Walt Disney (DIS), Amazon.com (AMZN), Danaher Corp. (DHR), Alibaba Group Holdings (BABA), and Fidelity National Information Services (FIS).
Third Point lost 3.7% through July this year, compared to a positive 2.4% return for the S&P 500 Index. Annualized returns since December 1996 inception are at 13.8%, compared to 8.2% for the S&P 500 Index. AUM is distributed among several strategies, of which the long/short equity portion accounts for ~40%. In addition to partner stakes, Third Point also invests the float of Third Point Reinsurance (TPRE) and capital from London-listed closed-end fund Third Point Offshore (OTC:TPNTF). To know more about Dan Loeb’s Third Point, check out his letters to shareholders at their site.
Note: Large equity investments not in the 13F report include Sony (SNE), EssilorLuxottica (OTCPK:ESLOY), and Nestle (OTCPK:NSRGY). All three are activist stakes. SNE is a $1.5B investment made in June 2019, when the stock was trading at around $50 per share. It is currently at ~$80. The ESLOY investment was made in early 2019, when the stock was trading at ~$62.50 per share. It currently trades at ~$67. The NSRGY position is from 2017, and the stock has rallied over 50% since.
Alibaba Group Holdings: BABA is a large (top-five) 5.91% of the portfolio position established this quarter at prices between $187 and $229, and the stock currently trades well above that range at $284.
Raytheon Technologies (RTX): The position came about due to the merger of United Technologies with Raytheon and the separation from Carrier (CARR) and Otis (OTIS) that closed in April. The terms called for United Technologies to be renamed Raytheon Technologies and for United Technologies shareholders to receive one share of CARR and 0.5 shares of OTIS for each share held. Third Point had a 4M share position in United Technologies. They also increased the resultant stake by ~30%. RTX currently trades at $60.90.
JD.com (JD) and Facebook Inc. (FB): These are medium-sized new positions purchased this quarter. JD is a 2.68% of the portfolio stake established at prices between $40 and $62, and the stock currently trades at $79.30. The 2.64% FB position was purchased at prices between $154 and $242, and the stock is now at $293.
Activision Blizzard (ATVI), Equitrans Midstream (ETRN), Evergy Inc. (EVRG), Nike Inc. (NKE), and Square Inc. (SQ): These are small (less than ~1.75% of the portfolio each) new positions established during the quarter.
Black Knight Inc. (BKI), Cannae Holdings (CNNE), Dish Network Notes (DISH), Gap Inc. (GPS), Intuit Inc. (INTU), and Take-Two Interactive (TTWO): These are very small (less than ~1% of the portfolio each) stakes purchased this quarter.
Note: Cannae Holdings and Black Knight Inc. are back in the portfolio after a quarter’s gap.
Allergan plc: Allergan was a large (top-five) merger arbitrage stake established in Q3 2019 at prices between $156 and $170. Last quarter saw a ~20% stake increase. In June 2019, AbbVie (ABBV) agreed to acquire Allergan in a cash-and-stock transaction ($120.30 per share cash and 0.8660 shares of ABBV for each share of Allergan held), which closed in May.
Centene Corp. (CNC): The large 6.18% CNC stake was purchased in May 2019 at around ~$55 per share. Last quarter saw a ~170% stake increase at prices between $45.55 and $68, while this quarter saw the position disposed at prices between $55 and $73. The stock currently trades at $60.49.
Note: On Centene, it was reported that Third Point had wanted the company to consider selling itself before spending $15.3B for the acquisition of WellCare Health. That transaction closed in January.
Roper Technologies (ROP), ServiceMaster Global Holdings (SERV), and Sherwin Williams (SHW): These small (less than ~1.5% of the portfolio each) positions established last quarter were eliminated this quarter. ROP was a 1.37% of the portfolio position purchased at prices between $254 and $393, and disposed at prices between $294 and $406. It currently trades at ~$428. SERV is a 1.34% of the portfolio position purchased at prices between $20.25 and $38.75, and disposed at prices between $24.75 and $36. It currently goes for $40.20. The 1.10% SHW stake was established at prices between $397 and $597, and sold at prices between $420 and $597. It is now at ~$672.
United Technologies: United Technologies was a large ~6% of the portfolio position established in Q1 2019 at prices between $104 and $129. Q2 2019 saw a ~7% trimming, while in Q4 2019, there was a ~13% stake increase. There was a ~23% reduction last quarter. The merger of United Technologies with Raytheon and the separation from Carrier and Otis closed in April. The new entity is Raytheon Technologies. The terms called for United Technologies to be renamed Raytheon Technologies and for United Technologies shareholders to receive one share of CARR and 0.5 shares of OTIS for each share held. CARR currently trades at $30.28 and OTIS at $63.23.
Avantor Inc. (AVTR), Raytheon, and Sony Corp.: These very small (less than ~1% of the portfolio each) stakes were disposed this quarter.
Note: Third Point has a large position in Sony. The 13F only shows the ADR stake.
Walt Disney and Charter Communications (CHTR): DIS is currently the largest 13F position at 8.40% of the portfolio. It was purchased last quarter at prices between $85 and $148. This quarter saw a ~300% stake increase at prices between $94 and $127. The stock currently trades at ~$134. The large 5.24% CHTR position was established last quarter at prices between $372 and $543, and increased by ~150% this quarter at prices between $424 and $547. It is now at ~$614.
Note: Third Point’s bullish thesis on Disney is on the idea that Direct-to-Consumer (DTC) streaming is a big opportunity: Disney+ reached 60M subscribers in nine months. This is compared to Netflix (NFLX), which took seven years to reach this milestone.
Fidelity National Information Services: The 5.87% FIS position came about as a result of FIS acquiring WorldPay in a cash-and-stock transaction (0.9287 FIS shares and $11 cash for each share held) that closed in July 2019. Third Point had a ~3% of the portfolio (2.2M shares) position in WorldPay. It was established in the 2017-2018 time frame at a cost basis of ~$70 per share. The resultant FIS stake was also increased by ~25% in Q3 2019 at prices between $125 and $140. It currently trades at ~$151. This quarter saw another ~37% stake increase at prices between ~$115 and ~$143.
IAA Inc. (IAA): IAA is a large 5.59% of the portfolio stake established in Q4 2019 at prices between $36 and $47. This quarter saw a ~63% stake increase at prices between $25 and $45. IAA is a June 2019 spin-off of the salvage auction business of KAR Auction Services (KAR). It started trading at ~$40 and currently goes for $51.37.
Burlington Stores (BURL): The 3.77% portfolio stake in BURL was established in Q2 2019 at prices between $146 and $177. The position saw a ~115% stake increase next quarter at prices between $168 and $205. Last quarter saw a ~20% selling at prices between $121 and $248, while this quarter, there was a similar increase at prices between $141 and $217. The stock currently trades at ~$202.
IQVIA Holdings (IQV): The 3.69% IQV position was purchased in Q3 2018 at prices between $99 and $131, and increased by ~25% in Q3 2019 at prices between $143 and $162. The stock currently trades at ~$159. Last quarter saw an ~8% trimming, while this quarter, there was a ~4% stake increase.
TE Connectivity (TEL): The 1.62% TEL stake was established last quarter at prices between $53 and $100, and it is now at $95.45. This quarter saw a ~7% stake increase.
Amazon.com: AMZN is a large (top-three) ~8% of the portfolio position purchased in Q4 2019 at prices between $1705 and $1870. The stake saw a ~200% increase last quarter at prices between $1677 and $2170. The stock is now well above those ranges at ~$3400. This quarter saw minor trimming.
Danaher Corp.: The top-three ~7.26% 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. It currently trades well above those ranges at ~$204. There was a ~20% stake increase in Q1 2019 at prices between $98 and $132. The last two quarters have seen a ~20% selling at prices between $129 and $177.
Note: The prices quoted above are adjusted for the Fortive (FTV) spin-off in July 2016.
Baxter International (BAX): BAX was Loeb’s largest position at ~15% of the 13F portfolio as of last quarter. It was reduced by roughly two-thirds to a 4.71% portfolio stake this quarter at prices between $79 and $94. The original position was from 2015 at a cost basis of ~$40 per share. The stock currently trades at ~$86. Third Point is realizing long-term gains.
Note: The position has seen selling since 2018: December 2018 saw a ~22% selling (8M shares) at $68.62, and that was followed with another ~18% selling (5M shares) in Q2 2019 at $76.37. Both these were block trades. Q3 2019 saw a ~27% selling at prices between $81 and $90. That was followed with another one-third selling last quarter at prices between $71.50 and $93.30.
Salesforce.com (CRM): The 3.65% CRM position was more than doubled in Q4 2018 at prices between $121 and $160. Q3 2019 saw the position almost doubled again at prices between $140 and $160. The stock is now at ~$276. The last two quarters have seen a ~37% selling at prices between $124 and $192.
Visa Inc. (V): The 3.31% V stake was established in Q2 2018 at prices between $118 and $136. The stock is now well above that range at ~$211. The last two quarters have seen a ~17% reduction at prices between $136 and $213.
Note: The bulk of the stake in Kadmon Holdings is from prior to its IPO in July 2016 (PE investment). The biopharma was founded in 2010 by Sam Waksal (ImClone insider trading conviction and 7-year prison term infamy, circa 2003). Loeb controls ~6.5% of Kadmon Holdings.
Adobe Systems (ADBE): ADBE is a ~4% stake that saw a ~75% increase in Q2 2018 at prices between $212 and $258, and another ~30% increase next quarter at prices between $242 and $275. There was a ~30% selling last quarter at prices between $285 and $383. The stock is now at ~$510.
S&P Global (SPGI): SPGI is a 3.50% position established in Q2 2016 at prices between $96 and $128. The position has wavered. In recent activity, the five quarters through Q1 2019 saw a combined ~60% selling at prices between $164 and $213. Since then, the activity has been minor. The stock is now at ~$364.
Ferrari NV (RACE): RACE is now a 2.54% of the portfolio position. A small position was purchased in Q4 2019. Last quarter saw the stake built at prices between ~$130 and ~$180. The stock currently trades at ~$196.
Far Point Acquisition (FPAC) & Units: The 2.20% position established in Q2 2018 has since been kept steady. Far Point Acquisition is a SPAC that Third Point co-sponsored. They control 24.9% of the business. In January, FPAC merged with Global Blue in a $2.6B deal that is expected to close this week – a majority have opted to redeem the shares.
Replay Acquisition Corp. (RPLA.U): The minutely small 0.15% position was kept steady during the quarter.
The spreadsheet below highlights changes to Loeb’s 13F stock holdings in Q2 2020:
Disclosure: I am/we are long ABBV, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.