"Tracking Dan Loeb’s Third Point Portfolio – Q1 2017 Update"
"Dan Loeb's 13F portfolio increased from $10.19B to $10.25B this quarter. The number of positions decreased from 38 to 37.Third Point added T-Mobile, Salesforce.com, and Qualcomm while decreasing Humana and dropping Apple.The top three 13F positions are Baxter International, Dow Chemical, and Constellation Brands. Together, they are at ~38% of the portfolio.This article is part of a series that provides an ongoing analysis of the changes made to Dan Loeb’s US stock portfolio on a quarterly basis. It is based on Third Point’s regulatory  filed on 05/12/2017. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q4 2016.The 13F portfolio is very concentrated with the top three holdings accounting for ~38% of the entire portfolio. Recent 13F reports show around 40 long positions. This quarter, Loeb’s US long portfolio value increased marginally from $10.19B to $10.25B. The number of holdings decreased from 38 to 37. Largest five individual stock positions are Baxter International, Dow Chemical, Constellation Brands, Facebook, and Alphabet Inc.Per their Q1 2017 investor letter, Third Point returned 5.9% for the quarter compared to 6.1% for the S&P 500 Index. Annualized returns since December 1996 inception are at 15.8% compared to 7.8% for the S&P 500 Index. In addition to partner stakes, Third Point also invests the float of Third Point Reinsurance (TPRE).To know more about Dan Loeb's Third Point, check-out his . His activist investing style is covered in the book "".New Stakes:T-Mobile US (TMUS): TMUS is a 3.15% of the portfolio position purchased this quarter at prices between $56.50 and $65 and the stock is now just above that range at $66.37. The buy-thesis is based on the idea that a combination of TMUS with either Sprint (S) or Dish Networks (DISH) is the only real alternative to the duopoly of AT&T (T) and Verizon (VZ).Note: TMUS has seen a couple of roundtrips in the portfolio over the last five years: a) a similar ~3% of the US long portfolio was established in Q2 2015 at prices between $31.50 and $40.50 and disposed of in Q4 2015 at prices between $34.50 and $41.50, and b) another similar stake was established in Q4 2013 at $25 per share and eliminated in Q3 2014 at prices between $28.50 and $34.Salesforce.com (CRM) and Qualcomm Inc. (QCOM): CRM is a 2.41% of the portfolio position established this quarter at prices between $70.50 and $84 and the stock currently goes for $87.40. QCOM is a ~2% of the portfolio stake established at prices between $52.50 and $67 and the stock is currently at $57.67.Hewlett Packard Enterprise (HPE), Celanese Corp. (CE), Pioneer Natural Resources (PXD), Alcoa Corp. (AA), RSP Permian (RSPP), and Parsley Energy (PE): These are a very small (less than ~1% of the portfolio each) positions established this quarterSnap Inc. (SNAP), Halcon Resources Corp. (HK), and Enerplus Corp. (ERF): These are minutely small stakes (less than 0.5% of the portfolio each) purchased this quarter.Stake Disposals:Apple Inc. (AAPL) and Conagra Foods (CAG): These two small stakes (less than ~2% of the portfolio each) established in Q3 2016 were reduced last quarter and eliminated this quarter. For AAPL, the purchases were at prices between $95 and $116 while the disposal happened at prices between $106 and $144. For CAG, the acquisitions were at prices between $31.50 and $37 while the elimination was at prices between $34 and $41.50. AAPL & CAG currently trades at $153 and $37.72 respectively.Note 1: Apple has seen previous roundtrips in the portfolio.Note 2: Conagra Foods spun off Lamb Weston (LW) in a transaction that closed in November last year. The terms called for CAG shareholders to receive one LW share for every three shares held. The prices quoted above are adjusted for this transaction.Chubb Ltd. (CB) previously Ace Ltd.: CB was a 1.56% of the portfolio stake established in Q4 2015 and increased by ~60% the following quarter at prices between $101 and $123. Q3 2016 saw a ~23% reduction at prices between $124 and $131 and that was followed by a one-third selling last quarter at prices between $122 and $133. The disposal this quarter was at prices between $128 and $140. The stock currently trades at $139.Note: Ace Limited acquired Chubb and it closed in January 2016. After the transaction, Ace Limited adopted the Chubb name.PrivateBancorp (PVTB) and Goldman Sachs (GS): These two financial stocks were added last quarter but eliminated this quarter. The small 1.60% PVTB stake was purchased at prices between $44 and $55 and sold at prices between $53.50 and $59.50. It now goes for $59.94. The very small 0.94% position in GS was established at prices between $161 and $243 and eliminated at prices between $225 and $253. It currently trades at $215.Monsanto Co. (MON): The 1.14% MON stake was purchased in Q2 2016 at prices between $86 and $113. Last quarter, the position was sold down by ~70% at prices between $98 and $106. This quarter, the remaining stake was sold at prices between $105 and $116. The stock is now at $116.Note: Bayer AG (BAYRY) is acquiring Monsanto for $128 per share cash.TransDigm Group (TDG): TDG was a very small 0.61% position as of last quarter. The original stake was purchased in Q1 2016 at prices between $187 and $230. The position was reduced by ~80% last quarter at prices between $245 and $290 and sold out this quarter at prices between $210 and $256. The stock currently trades at $256.Molson Coors Brewing (TAP): The 1.62% TAP stake was established in Q2 2015 at prices between $69.50 and $79 and more than doubled the following quarter at prices between $65 and $84.50. Q2 2016 saw a ~54% reduction at prices between $92 and $104. The pattern reversed again in Q3 2016: ~70% increase at prices between $93 and $110. The entire position was sold this quarter at prices between $95 and $102. The stock currently trades at $94.13.Broadcom Ltd. (AVGO), Grupo Supervielle SA (SUPV), HD Supply Holdings (HDS), Southwestern Energy (SWN), and Union Pacific (UNP): These small stakes (less than ~1% of the portfolio each) were disposed of this quarter.Stake Increases:Alphabet Inc. (GOOG): GOOG is a 3.76% stake established in Q1 2016 at prices between $678 and $765. It was reduced by ~43% in the following quarter at prices between $668 and $767. Q3 2016 saw a ~38% increase at prices between $692 and $787 while there was a ~23% selling last quarter at prices between $736 and $813. The stock is currently at $934. There was a minor ~7% increase this quarter.Note: GOOG has seen a previous roundtrip in the portfolio. A fairly large 3.44% of portfolio stake was established in Q3 2013 at prices between $423 and $435. It was sold in Q2 2014 at prices between $510 and $579.Time Warner Inc. (TWX): The 3.34% TWX stake was established last quarter at prices between $78.50 and $97 and increased by ~17% this quarter. The stock is now at $97.63.Note: In October last year, AT&T (T) agreed to acquire Time Warner in a cash-and-stock ($53.75 cash) deal worth $107.50 per share.Anthem Inc. (ANTM) and Rice Energy (RICE): These two small stakes (less than ~2% of the portfolio each) established last quarter were substantially increased this quarter. The 1.86% ANTM position was purchased at prices between $117 and $169 and the stock is now at $176. The 1.16% RICE position was established at prices between $18.50 and $29 and it currently goes for $21.52.Kadmon Holdings (KDMN): KDMN is a minutely small 0.33% position that saw a ~20% increase this quarter at $3.36. The stock is currently at $2.39.Note 1: 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).Note 2: Loeb controls ~18% of Kadmon Holdings (KDMN).Stake Decreases:Baxter International (BAX): BAX is Loeb’s largest position at 23.28% of the US long portfolio. The stake was established in Q2 2015 and increased substantially the following quarter at a cost-basis of $40.44. There was a ~11% selling this quarter at $50.35. The stock currently trades at $57.21.Dow Chemical (DOW): DOW is currently Third Point’s second-largest individual stock position at 9.73% of the US long portfolio. The original stake was established in Q4 2013 at prices between $38 and $45. In Q2 2014 and the following quarter, the position was increased by just over 220% at prices between $47 and $55. Q4 2014 saw an about-turn as ~24% of the position was disposed at prices between $43 and $53. Q2 & Q3 2016 saw another ~40% reduction at prices between $49 and $59. The stock currently trades at $61.29. There was a ~8% further trimming this quarter.Note: DOW is an activist stake. In December 2015, Dow and DuPont (DD) announced a merger of equals with plans to separate into three businesses after the merger.Facebook Inc. (FB): FB is a fairly large ~4% of the portfolio stake established in Q2 2016 at prices between $109 and $121 and increased by ~45% the following quarter at prices between $114 and $131. Last quarter saw the position reduced by ~36% at prices between $115 and $133 and that was followed with a ~14% trimming this quarter at prices between $117 and $143. The stock is now at $148.JPMorgan Chase (JPM) and Bank of America (BAC): These two financial stocks added last quarter were sold down this quarter. The 3.21% portfolio stake in JPM was purchased at prices between $66.50 and $87 and reduced by ~30% this quarter at prices between $83 and $93.50. It is now at $84.78. The 3.11% position in BAC was established at prices between $15.50 and $23 and reduced by ~23% this quarter at prices between $22 and $25.50. The stock is currently at $23.08.Humana Inc. (HUM): HUM is currently a 2.87% of the portfolio stake. It was established in Q3 2016 at prices between $153 and $180 and increased by ~70% last quarter at prices between $165 and $217. This quarter saw an about turn: ~40% sold at prices between $195 and $219. The stock is now at $228.Sherwin Williams (SHW): The 2.72% SHW stake was acquired in Q2 2016 at prices between $280 and $312. The following quarter saw a 25% increase at prices between $274 and $312. That was followed with another ~14% increase last quarter at prices between $241 and $278. The stock is currently at $332. This quarter saw a ~10% trimming.Danaher Corp. (DHR): The 2.59% 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 at $82.14. Q3 2016 saw a ~17% increase while last quarter saw a ~28% selling. There was a ~6% further trimming this quarter.Note: The investment in DHR is profiled in Third Point’s Q1 2016 partner letter. They believed the spinoff of Fortive (FTV) that closed in July 2016 will unlock significant value. The prices quoted above are adjusted for that transaction.Charter Communications (CHTR): CHTR is a 2.56% of the portfolio position established in Q2 2016 as a result of the merger of Charter Communications and Time Warner Cable that closed in May - Third Point had around 1.2M shares of Time Warner Cable. Third Point also more than doubled the stake at prices between $198 and $233. Q3 2016 saw a ~30% reduction at prices between $229 and $278 and that was followed with another ~23% trimming in the last two quarters. The stock is now at $316. Third Point is harvesting gains.General Dynamics (GD): GD was a very small 0.47% portfolio stake as of Q2 2016. The following quarter saw a huge ~280% increase at prices between $138 and $156. The stock is now above that range at $196 and the position is at 2.28% of the portfolio. There was a very minor ~4% trimming this quarter.Mohawk Industries (MHK): The 2.35% MHK position was established in Q4 2014 at prices between $125 and $158 and increased by ~220% in the following two quarters at prices between $153 and $194. The five quarters thru Q3 2016 had seen a combined ~62% selling at prices between $150 and $215. There was an about-turn last quarter: one-third increase at prices between $177 and $205. The pattern reversed again this quarter: ~21% sold at prices between $202 and $232. The stock currently trades at $230.Zayo Holdings (ZAYO): ZAYO is a ~2% position purchased last quarter at prices between $29.50 and $35 and reduced by ~14% this quarter at prices between $30 and $34. It currently trades at $31.25.S&P Global (SPGI): SPGI is a 1.91% position established in Q2 2016 at prices between $96 and $128. Last quarter saw a ~20% reduction at prices between $108 and $127. The stock is now at $138. There was a ~6% further trimming this quarter.Dell Technologies (DVMT): DVMT is a small 1.56% stake established in Q3 2016 and increased by ~13% last quarter. There was a very minor ~4% trimming this quarter.Nomad Foods (NOMD): NOMD foods is a very small 0.78% portfolio position that saw a ~40% reduction this quarter.Note: Third Point controls ~3.9% of Nomad Foods.Kept Steady:Constellation Brands (STZ) & Calls: The top three 4.74% STZ position was established in 2012. The three quarters thru Q3 2016 had seen a combined ~38% increase at prices between $135 and $168. There was another ~36% increase last quarter at prices between $145 and $171. The stock is currently well above those ranges at $183.Note: STZ investment was profiled in Third Point’s Q2 2015 partner letter. The thesis was that even after the tremendous price appreciation over the previous three years, the stock still traded at only 16x 2017 EPS forecast - there is opportunity for the multiple to re-rate as consumer staples businesses with growth in volumes, sales, and earnings trade at significantly higher multiples. At the time, the stock traded at ~$117.Sotheby’s (BID): BID is a ~3% of the US long portfolio position first purchased in Q1 2013. The bulk of the current position was purchased in Q3 2013 at prices between $39 and $51. The stock currently trades at $50.01. Third Point’s ownership stake in BID is at ~13%.Note: BID is an activist stake. Third Point has three board seats and in March 2015 Tad Smith was appointed as the new CEO.Enphase Energy (ENPH), Green Brick Partners (GRBK), and Honeywell International (HON): These small positions (less than ~1.5% of the portfolio each) were kept steady this quarter.Note 1: Loeb controlled ~5.1% of Enphase Energy as of Q1 2017. Regulatory filings since the quarter ended show them no longer holding any shares - the entire stake was sold at prices between 80c (bulk) and $1.10 per share.Note 2: Loeb controls ~25% of Green Brick Partners (previously BioFuel Energy).The spreadsheet below highlights changes to Loeb’s US stock holdings in Q1 2017:13G/D/A, Form 3/4 thru 2/12/2017: None.13G/D/A, Form 3/4 thru 11/15/2016: 13D/A 9/30/2016 - Enphase Energy - 6.7M shares - 11.2% of business. Thru 9/14/2016 - several Form 4s - Kadmon - 7.9M shares - increase from 7.66M shares at overall cost-basis of ~$9. 8/16/2016 Form 4 & 13D/A - BID - 6.66M shares, 12.1% of business. APIC - Exit.Investor Letter Info - ArchiveQ1 2016 - Dow Chemical - DOW/DD, Anheuser Busch - BUD/TAP/SAB, Charter Commn. -  TWX/CHTR, Chubb - CB/ACE Ltd.Q4 2015 - none.Q3 2015 - Baxter, Seven & I.Q2 2015 - AGN, Suzuki, Constellation Brands, Mohawk Industries, and Roper Technologies. PERFORMANCE - Offshore fund - Q2 2015 1.5%, H1 2015 4.9%, Annualized 17.1%.Q1 2015 - YUM, DVN, Japanese Equities Update.Q4 2014 - AMGN, FANUC, Greece Update.Q3 2014 - AMGN, EBAY, BABA. Also, SONY exit.Q2 2014 - Kroton Educacional, Fibra Uno, YPF, Royal DSM,Q1 2014 - DOW (update), Softbank (update),Q4 2013 - Softbank, Sony, T-Mobile, Dow Chemical, Ally Financial, Intrexon.Q3 2013 - Nokia,Q2 2013 - Sony Corporation, CF Industries, Yahoo,Q1 2013 - International Paper, Liberty Global,Q4 2012 - Greek Government Bonds, Murphy Oil, Herbalife, Morgan Stanley, Tesoro Corporation,Q3 2012 - Green Government Bonds, Murphy Oil, American International Group, Asset Back Securities portfolio,Q2 2012 - Europe in 2012, Yahoo (update), Delphi (update), Progress Energy Resource Corporation,Q1 2012 - Portuguese Soverign Bonds, Apple, Enphase, Express Scripts/Medco (arbitrage), Mortgage Portfolio,Q4 2010 - Paper Companies (distressed), Chrysler,Q4 2009 - Health Net, Mead Johnson Nutrition (risk arbitrage),Q4 2007 - Deutche Postbank, Microsoft.: Performance: -1.1% in Q3 compared to 3.8% for S&P 500. 6.1% YTD vs 12% YTD for S&P 500. 15.7% annualized since inception compared to 7.5% for S&P 500. Corporate Credit, Baxter, Dow Sotheby’s were winners while health sector, Allergan primarily and shorts were losers. Being heavily skewed toward certain sectors affected performance & that is something they are correcting. Exposure to financials increased from 4.4% before election to 11.8% one month after - they added to each of those positions in 2017 as well."