Tracking Dan Loeb's Third Point Portfolio - Q1 2022 Update

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John Vincent
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Summary

  • Dan Loeb's 13F portfolio value decreased from $14.33B to $7.68B this quarter. The number of positions decreased from 92 to 75.
  • Third Point added CSX & Alcoa while dropping Accenture and Upstart Holdings. They also increased EQT Corporation and Zendesk while reducing Amazon.com and Rivian.
  • The top three positions are at one-third of the portfolio: SentinelOne, PG&E Corp, and Danaher Corp.

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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 5/16/2022. 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 2021.

This quarter, Loeb's 13F portfolio value decreased ~45% from $14.33B to $7.68B as they reduced or sold several positions. The 13F portfolio is very concentrated with the top three holdings accounting for one-third of the entire portfolio. The number of holdings decreased from 92 to 75. 32 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 SentinelOne, PG&E, Danaher Corp, S&P Global, and Intuit.

Third Point returned negative 12.8% in 2022 through April compared to negative 12.9% for the S&P 500 Index. Annualized returns since December 1996 inception are at 14.2% compared to 8.9% for the S&P 500 Index. AUM is distributed among several strategies of which the long/short equity portion is roughly 36%, down from 55% as of Q4 2021. In addition to partner stakes, Third Point also invests the float of SiriusPoint (NYSE: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. Q1 2022 letter had a special mention on ConsenSys Software. They invested in the Series C funding round at a valuation of $3.2B and the Series D at $7B valuation.

Note 2: Large equity investments not in the 13F report include Shell plc (SHEL), Glencore plc (OTCPK:GLNCY), Sony (SONY), Essilor Luxottica (OTCPK:ESLOY), and Nestle (OTCPK:NSRGY). The Shell stake was built over the last three quarters while the Glencore plc position was established this quarter. SONY is a $1.5B investment made in June 2019 when the stock was trading at around $50 per share. It is currently at ~$90. The ESLOY investment was made in early 2019 when the stock was trading at ~$62.50 per share. It currently trades at ~$78. The NSRGY position is from 2017 and the stock has rallied from ~$75 to ~$117 now.

Note 3: Note: Their Q1 2022 letter had the following regarding the general thesis on their newer investments in the O&G and Materials spaces: expects commodities to be in short supply compared to demand in most of the developed markets including US in the coming years. This is caused by disastrous ESG policies that have resulted in a dearth of investments in the sector. As a result, the businesses are expected to return 20% of their market cap annually for several years.

New Stakes:

CSX Corporation (CSX): CSX is a 3.60% of the portfolio position purchased this quarter at prices between ~$33 and ~$38 and the stock currently trades below that range at $30.94.

Alcoa Corporation (AA): The 2.78% of the portfolio AA stake was established at prices between ~$56 and ~$95 and it is now near the low end of that range at $60.57.

Ovintiv Inc. (OVV), Suncor Energy (SU), Mosaic Company (MOS) and Ingersoll Rand (IR): OVV is a 1.58% of the portfolio position purchased this quarter at prices between ~$35 and $55 and it currently trades at $47.20. The 1.49% SU stake was established at prices between ~$26 and ~$34 and it is now at ~$38. MOS is a 1.11% of the portfolio position purchased at prices between ~$39 and ~$71 and the stock currently trades at ~$58. The ~1% IR stake was established at prices between ~$45 and ~$61 and it is now at $44.95.

Stake Disposals:

Upstart Holdings (UPST): Third Point's original position in UPST went back to a Series C funding round in 2015 when the business was valued at ~$180M. They also added 1.2M shares in last December's IPO as well. This quarter saw the entire stake sold at prices up to $228 per share. They had a ~15% stake in Upstart Holdings and realized gains of ~20x from ~$206M in total investments (~$66M six years ago and ~$140M at IPO). UPST started trading at ~$44 and currently goes for ~$44.70.

Accenture plc (ACN): ACN was a fairly large 3.62% of the portfolio position established last quarter at prices between ~$320 and ~$415. The disposal this quarter was at prices between ~$301 and ~$407. The stock currently trades at ~$277.

Alphabet Inc. (GOOG): GOOG was a 4.29% of the portfolio position purchased in Q4 2020 at prices between ~$1453 and ~$1828. There was a ~20% reduction in Q1 2021 at prices between ~$1728 and ~$2138. Last two quarters saw a ~10% increase while this quarter saw the stake sold at prices between ~$2534 and ~$2961. The stock is now at $2186.

CoStar Group (CSGP): CSGP was a 3.14% of the portfolio position purchased in Q1 2021 at prices between ~$76 and ~$94. This quarter saw the stake sold at prices between ~$53 and ~$79. The stock is now at ~$57.

Burlington Stores (BURL): The ~3% 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. Q1 2020 saw a ~20% selling at prices between $121 and $248 while next quarter there was a similar increase at prices between $141 and $217. Q3 2020 also saw a ~20% stake increase at prices between ~$171 and ~$217. The position was sold this quarter at prices between ~$173 and ~$289. The stock currently trades at ~$151.

Walt Disney (DIS): The 2.16% DIS stake was purchased in Q1 2020 at prices between $85 and $148. Next quarter saw a ~300% stake increase at prices between $94 and $127. The position was sold down by ~50% last quarter at prices between ~$142 and ~$178. The remaining stake was sold this quarter at prices between ~$129 and ~$158. The stock currently trades at ~$102.

Alight, Inc. (ALIT): The ~1% of the portfolio stake in ALIT was purchased in Q3 2021 at prices between ~$8.50 and ~$13 and the stock currently trades at $7.88. Last quarter saw a ~50% selling at prices between ~$10 and ~$12. The elimination this quarter was at prices between ~$8.50 and ~$11.

Expedia Group (EXPE): EXPE was a 1.65% of the portfolio position purchased last quarter at prices between ~$145 and ~$188. The disposal this quarter was at prices between ~$157 and ~$214. The stock currently trades at ~$125.

AES Corporation (AES), Align Technology (ALGN), Coupa Software (COUP), Comcast Corp (CMCSA), CF Industries (CF), Grab Holdings (GRAB), and RH (RH): These small (less than ~2% of the portfolio each) stakes were disposed during the quarter.

Stake Increases:

EQT Corp. (EQT), Zendesk Inc. (ZEN), and Hertz Global (HTZ): These three positions purchased last quarter were substantially increased this quarter. The fairly large ~4% EQT stake was established at prices between ~$18 and ~$23 and increased by ~80% this quarter at prices between ~$20 and ~$36. The stock currently trades well above those ranges at $40.85. ZEN is a ~3% position built at prices between ~$91 and ~$135 and it now goes for ~$99. The ~2% HTZ position was purchased at prices between ~$19 and ~$35 and it is now just below the low end of that range at $18.45. This quarter saw a ~10% stake increase.

DuPont de Nemours (DD): The 1.87% of the portfolio stake in DD was established in Q1 2021 at prices between ~$69 and ~$86 and it is now below that range at $63.85. There was a ~11% stake increase last quarter and a marginal increase this quarter.

Cano Health (CANO): The ~1% CANO position saw minor increases in the last two quarters.

Note: They have a 6.37% ownership stake in Cano Health.

Stake Decreases:

SentinelOne (S): SentinelOne is the top position at 13.27% 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 $24.77 at a valuation of ~$5.5B - their initial 2015 investment has so far returned a stunning ~60x.There was minor trimming this quarter.

Note: Regulatory filings since the quarter ended show them owning 24.8M shares (~12% of the business) of SentinelOne. This is compared to 26.3M shares in the 13F report. Around 1.5M shares were sold at ~$34.50 per share.

PG&E Corp. (PCG) & Units: PCG is currently the second-largest 13F stake at ~12% of the portfolio. The position came about as a result of participating in a PIPE (terms for the exit financing called for up to $10.50 per share purchase price). This quarter saw a ~10% trimming. The stock currently trades at $11.74.

Note: Third Point is very bullish on PG&E. The Q1 2022 letter had the following: the stock is trading at 12x 2022 earnings compared to 21x for the utility index as a whole and well below its closest comparable, Edison International at 15x. Further, the stock should benefit from the expected reinstatement of cash dividend in 2023 and inclusion in S&P 500 index eventually.

Danaher Corp. (DHR): The top three 9.51% 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. That was followed with a ~14% trimming this quarter. It currently trades at ~$252.

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

S&P Global (SPGI): SPGI is a fairly large (top five) 5.13% stake established in Q2 2016 at prices between $96 and $128. The position has wavered. Recent activity follows: the five quarters through Q1 2019 saw a combined ~60% selling at prices between $164 and $213. There was a ~30% stake increase over the two quarters through Q1 2021 at prices between ~$306 and ~$379. The stock is now at ~$342. This quarter saw a minor ~4% trimming.

Intuit Inc. (INTU): INTU is a 4.54% of the portfolio stake built over the four quarters through Q1 2021 at prices between ~$218 and ~$422. This quarter saw a ~40% selling at prices between ~$425 and ~$632. The stock currently trades at ~$368.

UnitedHealth (UNH): The ~4% UNH position was purchased during Q4 2020 and Q1 2021 at prices between ~$305 and ~$377. This quarter saw a ~23% selling at prices between ~$456 and ~$521. The stock currently trades at ~$486.

Avantor, Inc. (AVTR): The 3.68% AVTR stake was established in Q3 2020 at prices between ~$17 and ~$23 and increased by ~235% next quarter at prices between ~$22.50 and ~$28. There was a ~23% reduction this quarter at prices between ~$32.50 and ~$40.60. The stock currently trades at $31.22.

IQVIA Holdings (IQV): The 3.31% 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. There was a one-third selling in Q2 2021 at prices between ~$193 and ~$247. The stock currently trades at ~$202. This quarter saw a ~17% trimming.

Microsoft Corp. (MSFT): The ~2% of the portfolio MSFT stake was purchased in Q3 2020 at prices between ~$200 and ~$232. The two quarters through Q1 2021 had seen a ~60% stake increase at prices between ~$200 and ~$245. This quarter saw a two-thirds reduction at prices between ~$276 and ~$335. The stock currently trades at ~$253.

Rivian Automotive (RIVN): The ~2% of the portfolio RIVN stake was first disclosed in their Q3 2021 investor letter. They made the investment in two rounds prior to the IPO: a small stake in late 2020 and a larger one in July last year prior to the IPO. They reduced the position in late January and bought most of it back at much lower prices later in the quarter. The stock started trading at ~$100 and currently goes for ~$29.

Amazon.com (AMZN): AMZN was a large (top five) 5.47% of the portfolio position purchased in Q4 2019 at prices between $1705 and $1870. The stake saw a ~200% increase in Q1 2020 at prices between $1677 and $2170. There was a ~30% selling in Q4 2020 at prices between ~$3005 and ~$3444. Next quarter saw another ~20% reduction at prices between ~$2951 and ~$3380. Last three quarters had seen a stake doubling at prices between ~$3094 and ~$3731. This quarter saw the position reduced by ~90% to a very small 0.74% stake at prices between ~$2720 and ~$3408. The stock currently trades at $2152.

Archaea Energy (LFG), Catalent, Inc. (CTLT), Crown Holdings (CCK), Dell Technologies (DELL), Global Blue (GB), Leslie's, Inc. (LESL), Perimeter Solutions, SA (PRM), and TransDigm Group (TDG): These small (less than ~2% of the portfolio each) stakes were reduced during the quarter.

Kept Steady:

Ventyx Biosciences (VTYX): The very small 0.76% of the portfolio stake in VTYX was kept steady this quarter.

The spreadsheet below highlights changes to Loeb's 13F stock holdings in Q1 2022:

Dan Loeb - Third Point's Q1 2022 13F Report Q/Q Comparison

Dan Loeb - Third Point's Q1 2022 13F Report Q/Q Comparison (John Vincent (author))

This article was written by

John Vincent profile picture
20.72K Followers
Previously a professional in the software industry and currently focused on absolute returns based on investment research and analysis.
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Disclosure: I/we have a beneficial long position in the shares of AMZN, CANO, GOOL, GRAB, RIVN, SHEL, SU either through stock ownership, options, or other derivatives. 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.

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