"Tracking Dan Loeb’s Third Point Portfolio – Q1 2019 Update"
"Dan Loeb's 13F portfolio value increased from $6.51B to $8.99B this quarter. The number of positions increased from 22 to 31.Third Point dropped Merck while reducing Constellation Brands and American Express.The top three positions are Baxter International, United Technologies, and Campbell Soup. They are at ~44% of the portfolio.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  filed on 05/15/2019. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q4 2018.The 13F portfolio is very concentrated with the top three holdings accounting for ~44% of the entire portfolio. Recent 13F reports show around 30 long positions. This quarter, Loeb’s portfolio value increased ~38% from $6.51B to $8.99B. The number of holdings increased from 22 to 31. The largest five individual stock positions are Baxter International, United Technologies, Campbell Soup, Danaher Corp, and DowDuPont.Per their Q1 2019 letter, Third Point gained 8.8% for the quarter compared to 13.6% for the S&P 500 Index. Annualized returns since December 1996 inception are at 14.7% compared to 8.1% for the S&P 500 Index. 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 (TPNTF).To know more about Dan Loeb's Third Point, check-out his . His activist investing style is covered in the book "".Note: Third Point has a large (top three) investment in Nestle (NSRGY). It is not reported in the 13F report as it is not a 13F security. In July 2018, Third Point released a  calling for a three-way internal split (Beverages, Nutrition, and Grocery) of Nestle’s businesses along with divestitures of non-core assets (primarily L’Oréal).New Stakes:United Technologies (UTX), Marathon Petroleum (MPC), Netflix Inc. (NFLX), and Microsoft Corp. (MSFT): These four positions are back in the portfolio after a quarter’s gap. UTX is a large (top three) ~9% of the portfolio position established at prices between $104 and $129. The stock currently trades at $131. The 2.33% MPC stake was purchased at prices between $57.50 and $67 and it is now at $50.29. NFLX is a 1.59% position established at prices between $268 and $378 and the stock now goes for $354. MSFT is a very small 0.66% position.Note: UTX, MPC, NFLX, and MSFT stakes were at 9.14%, 2.18%, 3.64%, and 3.65% respectively as of Q3 2018.Fox Corp (FOX): FOX is a ~4% of the portfolio position purchased this quarter at prices between $28.75 and $39.55 and the stock is now at $36.45.Boston Scientific Corp (BSX): the 2.13% BSX stake was established this quarter at prices between $33 and $41 and it is now at $38.47.Black Knight Inc. (BKI), Celgene Corp (CELG), Chemours Co (CC), Intl Flavors & Fragrances (IFF) Puts, Sony Corp (SNE), Colfax Corp (CFX), Microsoft Corporation (MSFT), and Ross Stores (ROST): These are small (less than ~2% of the portfolio each) positions established this quarter.Stake Disposals:Cigna Corp (CI): CI is a new 1.68% of the portfolio position established last quarter at prices between $178 and $225 and disposed this quarter at prices between $159 and $200. The stock currently trades below those ranges at $150.Merck & Co (MRK): The 3.26% MRK position was purchased in Q3 2018 at prices between $60.50 and $71 and the stock is now above that at $81.17. Last quarter saw a ~38% reduction at prices between $68 and $79 and the disposal this quarter was at prices between $73 and $83.Dover Corp. (DOV): The very small 0.66% DOV activist stake had seen a 140% increase in Q1 2018 at prices between $77 and $88. The stake was sold down by ~85% last quarter at prices between $66.50 and $88 and eliminated this quarter at prices between $70 and $96. The stock currently trades at $90.90.Note: The prices quoted above are adjusted to reflect the spinoff of Apergy (APY) that closed in May last year.Shire plc and: Shire plc was a 4.60% stake established in Q3 2018 at prices between $166 and $181 - Takeda’s acquisition of Shire plc closed in January thereby eliminating this position.Stake Increases:Danaher Corp. (DHR): The ~5% 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 ~$132. Last quarter saw a minor ~4% trimming. There was a ~20% stake increase this quarter at prices between $98 and $132.Note: The prices quoted above are adjusted for the Fortive (FTV) spin-off in July 2016.Stake Decreases:DowDuPont (DWDP): DWDP is a large (top five) ~5% portfolio position. The original Dow Chemical stake was established in Q4 2013 at prices between $38 and $45. In Q2 & Q3 2014, 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. Since then, the position had been reduced by ~30% thru minor trimming in most quarters. Last three quarters saw a ~40% selling at prices between $33 and $48. The stock currently trades at $31.08.Note 1: Third Point’s Q1 2018 letter discussed the position: Materials, Specialty & Ag Co future spins has strong parallels to LyondellBasell (LYB), 3M (MMM), and Monsanto (MON) respectively - 2020 estimates are identical but valuation is ~40% lower. At the time, they expected the valuation gap ($92 FVE) to narrow by Q1 2019.Note 2: DowDuPont is an activist stake. In December 2015, Dow and DuPont announced a merger of equals and that transaction closed last September forming the new entity DowDuPont. The plan was to then split into three separate businesses. In May last year, Third Point suggested an : their main contention was that carve-outs of DOW and DD had performed very well in the past (Example Trinseo & Olin from Dow and Axalta & Chemours from DuPont) and so a similar strategy would be more appropriate than a three-way split. In September 2018, partly in response, DowDuPont announced certain adjustments to the original three-way split.PayPal Holdings (PYPL): PYPL is a ~4% of the portfolio stake established in Q2 2018 in the low-80s. The stock is currently at ~$110. The stake saw a ~55% reduction last quarter at prices between $75 and $89 and that was followed with a ~13% trimming this quarter.Worldpay Inc. (WP) previously Vantiv: WP is a ~3% portfolio stake built in H2 2017 at prices between $60 and $76. The stock currently trades well above that range at $120. There was a ~30% reduction in Q2 2018 at prices between $78 and $85. Last quarter saw a minor ~5% increase while this quarter saw a ~14% selling.Constellation Brands (STZ): The fairly large 4.32% 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 in Q4 2016 at prices between $145 and $171. Q2 2017 saw an about-turn: ~17% selling at prices between $161 and $194. The stock is currently at $199. H1 2018 had seen a ~20% selling at prices between $208 and $234 while next quarter saw a similar increase at prices between $200 and $222. There was a ~27% reduction last quarter at prices between $157 and $229 and that was followed with a ~40% selling this quarter at prices between $151 and $178.American Express (AXP): AXP is a fairly large ~4% portfolio stake established in Q3 2018 at prices between $98 and $111 and the stock currently trades at ~$120. Last quarter saw a 42% selling at prices between $89.50 and $113 and that was followed with a ~50% reduction this quarter at prices between $93 and $114.Note: The AXP investment was profiled in Third Point’s Q3 2018 . They believed sustainable double‐digit EPS growth will be achieved under new CEO Stephen Squeri as he focuses on topline growth and under‐appreciated structural opportunities in Commercial and International. That should result in a share price of ~$135 in eighteen months.S&P Global (SPGI): SPGI is a 1.78% position established in Q2 2016 at prices between $96 and $128. Q4 2016 saw a ~20% reduction at prices between $108 and $127 and that was followed with another ~17% selling in Q3 2017 at prices between $146 and $157. There was an about-turn in the following quarter: ~45% increase at prices between $155 and $173. The stock is now at ~$214. Last five quarters have seen a combined ~58% reduction at prices between $164 and $213. Loeb is harvesting gains.iShares 1-3 year treasury bond: The iShares 1-3 year treasury bond position is a minutely small 0.05% stake that saw minor trimming in the last two quarters.Kept Steady:Baxter International (BAX): BAX is Loeb’s largest position at ~25% of the 13F portfolio. The stake was established in Q2 2015 and increased substantially the following quarter. There was a ~11% selling in Q1 2017 at $50.35 and another similar trimming the following quarter at $59.50. Q4 2017 saw another ~12% trimming at $64.23. December 2018 saw another ~22% selling (8M shares) in a block trade at $68.62. Loeb’s cost-basis on BAX is $40.05. The stock currently trades at $75.10.Note: Regulatory filings since the quarter ended show them owning 23M shares of Baxter International. This is compared to 28M shares in the 13F report - 5M shares sold at $76.37. Third Point still controls 4.5% of the business.Campbell Soup (CPB): The large (top three) ~9% CPB stake was established in Q2 2018 and increased next quarter. The bulk of the position was purchased at prices between $35 and $42. There was a ~17% stake increase last quarter at prices between $32 and $41. The stock is now at $37.53. For investors attempting to follow, CPB is a good option to consider for further research.Note: CPB position is an activist stake. Third Point initially pursued the replacement of the entire 12-member board but has since settled for two board seats in a truce with management. The standstill agreement thru November 2019 also stipulates Third Point not to raise ownership stake beyond ~9%. The ownership position is currently at ~7%.Sotheby’s (BID): BID is a ~3% of the portfolio position first purchased in Q1 2013. The bulk of the current stake was purchased in Q3 2013 at prices between $39 and $51. The stock currently trades at $37.80. Third Point’s ownership stake in BID is ~14%.Note: BID is an activist stake. Third Point has three board seats and in March 2015 Tad Smith was appointed as the CEO.Iqvia Holdings (IQV): The 2.61% IQV position was purchased in Q3 2018 at prices between $99 and $131 and the stock currently trades at $136.Adobe Systems (ADBE): ADBE is a 2.67% 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. It is now at $275.Visa Inc. (V): The 2.60% V stake saw a ~11% trimming last quarter. The position is from Q2 2018 established at prices between $118 and $136. The stock is now well above that range at ~$163.Salesforce.com (CRM): The ~2% CRM position was more than doubled last quarter at prices between $121 and $160. It had seen a ~20% selling in Q3 2018 at prices between $137 and $160. The stock is now at $155.Far Point Acquisition (FPAC) & Units: The ~2% position established in Q2 2018 has since been kept steady.Note: Far Point Acquisition is a SPAC that Third Point co-sponsored. It will have a focus on Financial Technology. Ex-NYSE (Intercontinental Exchange subsidiary) President Tom Farley is CEO.Kadmon Holdings (KDMN): The minutely small 0.28% stake in KDMN was kept steady this quarter.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 ~8% of Kadmon Holdings (KDMN).The spreadsheet below highlights changes to Loeb’s 13F stock holdings in Q1 2019:Regulatory Filings thru 2/10/2019: 13G/A – 2/8 – Kadmon (KDMN) – 9.4M shares – 8.3% of business, 13D/A – 12/4/2018 – BAX - ~28M shares – 5.3% of business – on Dec 3, 8M shares sold in a block trade at $68.62.  13D/1 – 12/4/2018 – CPB – 21M shares – 6.98% of business – standstill agreement thru Nov 26, 2019 – won’t increase stake above 9% of business –gets two board seats as board expands from 12 to at-least 14."