"Tracking Dan Loeb’s Third Point Portfolio – Q3 2015 Update"
"Dan Loeb's 13F portfolio decreased marginally from $10.68B to $10.60B this quarter. The number of positions decreased from 43 to 32.Third Point significantly increased Baxter International & Yum Brands and added a large stake in Kraft Heinz during the quarter.The top-three 13F positions are Baxter International, Amgen Inc., and Allergan plc which together is at ~39% 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 11/13/2015. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q2 2015.The 13F portfolio is very concentrated with the top-three holdings accounting for 38.95% of the entire portfolio. Recent 13F reports show around 40 long positions. This quarter, Loeb’s US long portfolio decreased marginally from $10.68B to $10.60B. The number of holdings decreased from 43 to 32. Largest five individual stock positions are Baxter International, Amgen Inc., Allergan plc, Dow Chemical, and Yum Brands.As per their Q3 2015 investor letter, Third Point’s YTD return was -4.5%. Annualized returns since December 1996 inception are at 16.2%. The letter also mentioned that the environment is attractive for short-selling and their short book is currently longer than their long book. In addition to partner stakes, Third Point also invests the float of Third Point Reinsurance (TPRE).To add from Q4 2015 Update onwards: To know more about Dan Loeb's Third Point, check-out his . His activist investing style that is epitomized by scathing letters to CEOs is covered in "Chapter 7: The Poison Pen: Dan Loeb, Third Point" in the book "".New Stakes:Kraft Heinz Co. (KHC): KHC is a fairly large 5.49% of the US long portfolio stake established this quarter at prices between $69.20 and $80.48. The stock currently trades at $71.45. Kraft Heinz started trading in July following the merger of Heinz with Kraft Foods Group engineered by 3G Capital and Berkshire Hathaway.Avago Technologies (AVGO), Danaher Corp. (DHR), & Time Warner Cable (TWC): These are ~2% of the portfolio stakes established this quarter. AVGO was purchased at prices between $109 and $138 and it currently trades at $122. DHR stake was established at prices between $82.40 and $92.96 and it is currently at $95.35. TWC was purchased at prices between $174 and $193 and it is now at $184.Note: Time Warner Cable is being acquired by Charter Communications (CHTR). In May, CHTR offered a cash-and-stock deal valued at $195 per share ($100 cash).Stake Disposals:Ally Financial (ALLY): ALLY was a 2.10% of the US long portfolio stake as of last quarter. It was disposed of this quarter at prices between $19.93 and $22.99. The position was established in Q2 2014 as a result of its IPO in April 2014. Loeb started investing in ALLY in 2011 through unsecured debt and preferred securities. Q4 2014 saw a ~28% reduction at prices between $20.12 and $24.95 and the following quarter saw a further ~13% reduction at prices between $18.71 and $23.88. Last quarter the selling accelerated: ~62% reduction at prices between $19.95 and $23.66. The stock currently trades at $19.59 compared to the IPO price of $24.American International Group (AIG): The 2.03% AIG stake established in Q4 2014 at prices between $49.40 and $56.51 was disposed of this quarter at prices between $56 and $65. The stock currently trades at $61.Note: AIG had a previous roundtrip in the portfolio: At the end of 2012, AIG was a huge stake at 12% of the US long portfolio. 18.5M shares were purchased during that year at a cost-basis in the high-20s. Loeb realized large gains from that stake exiting at prices between $35 and $56.Delta Air Lines (DAL): A ~1% DAL position was established in Q4 2014 at prices between $30.90 and $49.23 and increased by just over one-third the following quarter at prices between $41.64 and $50.74. Last quarter the pattern reversed: ~48% reduction at prices between $40.57 and $47.40 and that was followed with the elimination this quarter at prices between $40 and $48. The stock currently trades at $47.75.Devon Energy (DVN): A ~2% DVN stake established last quarter at prices between $58.82 and $69.03 was eliminated this quarter at prices between $36.43 and $59.49. The stock currently trades at $45.91.Masco Corporation (MAS): MAS was a 1.25% of the US long portfolio position established in Q1 2014 at prices between $20.74 and $23.63. It was increased by ~80% the following quarter at prices between $19.54 and $22.89 and another ~24% in Q4 2014 at prices between $20.86 and $25.40. Last quarter, half the stake was sold at prices between $25.65 and $27.92 and the remaining was sold this quarter at prices between $22.63 and $28.35. The stock currently trades at $29.32.Phillips 66 (PSX): PSX was a 2.45% of the US long portfolio position established in Q4 2014 at prices between $65 and $81.31. It was reduced by ~20% the following quarter at prices between $59 and $80 and another ~19% last quarter at prices between $76.79 and $81.63. This quarter, the remaining stake was sold at prices between $70.55 and $84.32. The stock currently trades at $91.12.Sensata Technologies (ST): ST was a very small 0.71% of the US long portfolio position as of last quarter. The original stake is from Q1 2014 at prices between $36.78 and $42.90. The position was increased by ~62% in Q2 2014 at prices between $41.59 and $46.78 and another two-thirds the following quarter at prices between $45.15 and $49.76. Q4 2014 saw a ~20% reduction at prices between $41.67 and $53.70. Last quarter, almost two-thirds of the remaining stake was sold at prices between $52.56 and $58.66 and that was followed with the elimination this quarter at prices between $42.75 and $52.88. The stock currently trades at $43.85.Sunedison Inc. (SUNE): SUNE was a medium-sized 3.48% position established in Q3 2014 at prices between $18.88 and $24.05 and increased by ~88% the following quarter at prices between $14.30 and $22.86. Q1 2015 had seen a ~10% reduction while last quarter saw a ~23% increase at prices between $24 and $32. The entire position was disposed of this quarter at prices between $6.66 and $31.84. The stock currently trades at $3.02.FedEx Corporation (FDX), iShares China Large Cap ETF (FXI), Perrigo Company plc (PRGO), Telefonica Brasil ADR (VIV), and Williams Companies (WMB): These very small (less than ~1.5% of the portfolio each) positions were sold this quarter.Note: WMB had seen a previous round-trip in the portfolio: It was a small 1.62% of the US long portfolio position first purchased in Q4 2013 at prices between $35 and $39. In Q1 2015, that stake was sold at prices between $40.94 and $50.64.Stake Increases:Allergan plc (AGN) previously Actavis plc: AGN is the third-largest individual stock position at 9.41% of the US long portfolio. It was established in Q1 2014 at prices between $168 and $227. The stake was increased by ~15% in Q3 2014 at prices between $203 and $248 and another 20% the following quarter at prices between $217 and $271. Last quarter saw a ~8% reduction while this quarter saw a ~11% increase. The stock currently trades at $297.Note: Third Point profiled AGN in their Q2 2015 partner letter. Loeb likes the fact that management is aligned with shareholders: they have tied their long-term compensation to achieving $25 per share earnings target in 2017.Amgen Inc. (AMGN): A very small stake in AMGN was established in Q2 2014. It was increased by almost 200% in Q3 2014 at prices between $115 and $144. In Q4 2014, the position was increased by a whopping ~700% at prices between $130 and $172. It is currently Third Point’s second-largest stake at 12.85% of the US long portfolio. Last two quarters had seen a combined ~15% trimming at prices between $150 and $170 while this quarter saw a ~9% increase at prices between $132 and $177. The stock currently trades at $158.Note: Loeb’s buy thesis is based around the idea that efficient capital allocation along with splitting the company into a mature business and growth business should unlock tremendous value over the next two years ($249 price-target).Baxter International (BAX): BAX is Loeb’s largest position at 16.69% of the US long portfolio.  The stake was established last quarter and increased substantially this quarter at a cost-basis of $40.44. The stock currently trades at $37.77. For investors attempting to follow Loeb, BAX is a good option to consider for further research.Dow Chemical (DOW): DOW is currently Third Point’s fourth-largest individual stock position at 9.04% of the US long portfolio. The original stake was established in Q4 2013 at prices between $38.30 and $45. In Q2 2014, the position was increased by just over 180% at prices between $46.95 and $53.15 and the following quarter saw an additional one-third increase at prices between $51 and $55. Q4 2014 saw an about-turn as ~24% of the position was disposed of at prices between $42.71 and $52.84. Last two quarters have seen minor increases. The stock currently trades at $51.65.Note: DOW is an activist stake and Loeb has said that a “combination of closures, modifications brownfield investments, and divestitures” will be required in Dow’s petrochemical assets to harness the full potential.Roper Technologies (ROP) formerly Roper Industries: The 2.37% ROP stake was purchased in Q1 2014 at prices between $132 and $142. It was increased by ~23% in Q1 2015 at prices between $146 and $174. Last quarter saw a minor reduction while this quarter saw a similar increase. The stock currently trades at $186.Note: Dan Loeb profiled Roper in the Q2 2015 Partner Letter and called it one of the best capital allocators among industrials: the combination of capital deployment and operating excellence should allow it to compound earnings at a 15% CAGR going forward.Sealed Air Corp. (SEE): SEE is a 2.32% of the portfolio stake established last quarter at prices between $43.80 and $52.60 and increased by ~8% this quarter. The stock currently trades near the low end of that range at $44.22.T-Mobile US (TMUS): TMUS is a 3.19% of the US long portfolio stake established last quarter at prices between $31.49 and $40.24 and increased by ~13% this quarter at prices between $36.50 and $43.03. The stock currently trades at $38.15.Note: TMUS has seen a previous round-trip in the portfolio: it was a 3.31% of the US long portfolio position established in Q4 2013 at $25 per share. It was eliminated in Q3 2014 at prices between $28.44 and $33.91. The buy-thesis at the time was that despite regulatory issues, a combination of TMUS with either Sprint (S) or Dish Networks (DISH) was the only real alternative to the duopoly of AT&T (T) and Verizon (VZ).Yum! Brands (YUM) & Calls: YUM is a large (top-five) 8.84% of the US long portfolio stake established in Q1 2015 at prices between $70 and $82 and increased by ~12% last quarter at prices between $78 and $95. This quarter saw a huge ~200% increase at prices between $76 and $92. The stock currently trades just below his purchase price ranges at $69.94. For investors attempting to follow Loeb, YUM is a good option to consider for further research.Note: Loeb’s Q1 2015 letter discussed the position: the investment thesis boils down to its association with Chinese middle-class growth and the projected franchise-led cash-flow growth.Molson Coors Brewing (TAP): The 1.68% TAP stake was established last quarter at prices between $69.81 and $78.67 and more than doubled this quarter at prices between $65.19 and $84.38. The stock currently trades well above those ranges at $95.13.Stake Decreases:Anheuser Busch (BUD) & Calls: BUD is a 2.66% of the US long portfolio position established in Q1 2014 at prices between $94 and $107. The stake was increased by ~30% in Q2 2014 at prices between $105 and $116. Last four quarters had seen a combined ~70% increase at prices between $106 and $127 while this quarter saw a ~12% trimming at prices between $104 and $129. The stock currently trades at $125.Constellation Brands (STZ) & Calls: The 2.07% STZ position was first purchased in 2012 and had only seen marginal activity since. Last four quarters saw a combined ~17% reduction.Note: STZ investment is profiled in Third Point’s Q2 2015 partner letter. The current thesis is that even after the tremendous price appreciation in the last three years, the stock still trades 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.eBay Inc. (EBAY): The EBAY position is at 2.08% of the US long portfolio. The stake was established in Q3 2014 at prices between $19.50 and $22 and increased by ~120% the following quarter at prices between $18.68 and $22.44. Q1 2015 saw another 15% increase at prices between $20.67 and $23.72. This quarter saw a ~18% decrease at prices between $24 and $29. The stock currently trades at $28.45.Note: eBay spun-off PayPal (PYPL) in July. The prices quoted above are adjusted for the spinoff.IAC Interactive (IACI): IACI is a 1.54% of the US long portfolio position purchased in Q2 2014 at prices between $62 and $70 and increased by ~19% in Q4 2014 at prices between $58.48 and $67.88. Last quarter saw another ~15% increase while this quarter saw a ~9% trimming. The stock currently trades at $62.51.Intrexon Corporation (XON): The original XON stake was acquired in 2011 when the company was private. The position is very small at 0.45% of the US long portfolio. This quarter saw a ~44% reduction at prices between $29.31 and $68.71. The stock currently trades at $35.23 compared to the Q3 2013 IPO price of $29.Mohawk Industries (MHK): The 3.69% MHK position was established in Q4 2014 at prices between $125 and $158 and was increased by ~180% the following quarter at prices between $153 and $186. Last quarter had seen another one-third increase at prices between $174 and $194. This quarter saw a ~10% trimming at prices between $176 and $211. The stock currently trades at $182.Note: Mohawk was profiled in Third Point’s Q2 2015 partner letter. Dan Loeb praised Jeff Lorberbaum (CEO and largest shareholder) saying he empowered local managers to pursue acquisitions and expansions. That has caused MHK to remain entrepreneurial, nimble, and adjustable to change, despite having grown to become a large-cap. It is very rare for Loeb to praise an incumbent CEONXP Semiconductors (NXPI), J M Smucker (SJM), and Clayton Williams Energy (CWEI): These are very small (less than ~1.5% of the portfolio each) positions that were further reduced this quarter.Note 1: In March, NXP agreed to acquire Freescale Semiconductor (FSL) and they received shareholder approval in July.Note 2: Dan Loeb controls ~7.2% of Clayton Williams Energy.Kept Steady:Liberty Global (LBTYA) (LBTYK): LBTYK is a 1.93% of the US long portfolio position. It has been in the portfolio since 2011. Last quarter saw a ~14% reduction at prices between $48.22 and $54.41. The stock currently trades at $41.57.Sotheby’s (BID): BID is a 2.01% of the US long portfolio position first purchased in Q1 2013 at prices between $32 and $40. The bulk of the current position was purchased in Q3 2013 at prices between $39 and $51. The stock currently trades at $28.90. For investors attempting to follow Third Point, BID is a good option to consider for further research.Note: BID is an activist stake. On October 2nd, 2013 Dan Loeb wrote a letter to Sotheby’s chairman asking him to step down. The main point of the letter was that the company’s upper management and board interests are not aligned with shareholders. Last March, Third Point got 3 board seats and in March this year Tad Smith was appointed as the new CEO.Green Brick Partners (GRBK): GRBK is a very small 0.82% stake. Dan Loeb controls ~25% of Green Brick Partners (previously BioFuel Energy).The 13F portfolio also has the following minutely small (less than 0.5% of the portfolio each) stakes: Apigee Corp. (APIC), Citigroup Warrants (C.WS.A), Enphase Energy (ENPH), and a debt holding - Cobalt International Energy (CIE) notes.Note 1: Loeb controls ~11% of Apigee and ~14% of Enphase Energy (ENPH).Note 2: The following minutely small positions as of last quarter were eliminated this quarter: Charter Communications (CHTR), Edgewell Personal Care (EPC), Nokia Corp. (NOK), Ziopharm Oncology (ZIOP).The spreadsheet below highlights changes to Loeb’s US stock holdings in Q3 2015:"