"Tracking Dan Loeb’s Third Point Portfolio – Q4 2019 Update"
"Dan Loeb's 13F portfolio value increased from $8.42B to $8.70B this quarter. The number of positions decreased from 40 to 37.Third Point added IAA Inc. while decreasing Fox Corp, Campbell Soup, & United Technologies. They also dropped PayPal.The top three positions are at just over one-third of the portfolio: Baxter International, United Technologies, and Campbell Soup.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 02/13/2020. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q3 2019.The 13F portfolio is very concentrated with the top three holdings accounting for ~34% of the entire portfolio. Recent 13F reports show around 40 long positions. This quarter, Loeb’s 13F portfolio value increased ~3% from $8.42B to $8.70B. The number of holdings decreased from 40 to 37. The largest five individual stock positions are Baxter International, United Technologies, Campbell Soup, Allergan plc, and Danaher Corp.Per their Q4 2019 letter, Third Point gained 17.1% for 2019 compared to 31.5% for the S&P 500 Index. Annualized returns since December 1996 inception are at 14.5% compared to 8.5% 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 (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 "".Note: Large equity investments not in the 13F report include Sony (SNE), Essilor Luxottica (ESLOY), and Nestle (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 ~$69. In a presentation on Sony released later that month, Third Point urged management to split the semiconductor business so as to transform Sony’s core businesses into an entertainment behemoth (PlayStation, Music, and Video). The ESLOY investment was made in early 2019 when the stock was trading at ~$62.50 per share. It currently trades at ~$76. For investors attempting to follow, ESLOY is a good option to consider for further research. The NSRGY position is from 2017 and the stock has rallied over 50% since.New Stakes:IAA Inc. (IAA): IAA is a medium-sized 3.5% of the portfolio stake established this quarter at prices between $36 and $47. IAA is a June 2019 spinoff of the salvage auction business of KAR Auctions (KAR). It started trading at ~$40 and currently goes for $50.34.TD Ameritrade (AMTD), Amazon.com (AMZN), Avantor Inc. (AVTR), Raytheon (RTN), and ViacomCBS (VIAC): These are small (between ~1% and ~2% of the portfolio each) new stakes purchased this quarter.Note: Charles Schwab is acquiring TD Ameritrade in an all-stock deal (1.0837 shares of SCHW for each AMTD held) announced in November.Charles Schwab (SCHW), XP Inc. (XP), Ferrari NV (RACE), Bristol Myers Squibb Rights, and Cannae Holdings (CNNE): These are minutely small (less than ~0.5% of the portfolio each) positions established during the quarter.Stake Disposals:PayPal Holdings (PYPL): PYPL was a 3.32% of the portfolio stake established in Q2 2018 in the low-80s price range. The stake saw a ~55% reduction in Q4 2018 at prices between $75 and $89 and that was followed with a ~13% trimming next quarter. The disposal this quarter was at prices between $96 and $110. The stock currently trades at $123.Sotheby’s (BID): BID was a 4.51% of the portfolio position first purchased in Q1 2013. The bulk of the stake was purchased in Q3 2013 at prices between $39 and $51. Third Point’s ownership stake in BID was ~14%. In June 2019, the stock spiked following an acquisition agreement at $57 per share in a going-private deal. The transaction closed in October.Microsoft Corp. (MSFT): MSFT was a small ~1% position purchased in Q1 2019 and increased by ~20% next quarter at prices between $97 and $138. The stake was eliminated this quarter at prices between $135 and $159. The stock is currently at ~$185.AmeriCold Realty (COLD), Ansys Inc. (ANSS), Afya Ltd. (AFYA), Colfax Corp (CFX), Envista Holdings (NVST), Essential Properties (EPRT), GoDaddy Inc. (GDDY), HD Supply Holdings (HDS), SmileDirectClub Inc. (SDC), Tradeweb Markets (TW), and Zendesk (ZEN): These minutely small positions were disposed during the quarter.Stake Increases:Baxter International (BAX): BAX is Loeb’s largest position at ~17% of the 13F portfolio. The stake was established in Q2 2015 and increased substantially the following quarter. Recent activity follows: 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. Loeb’s cost-basis on BAX is $40.05. Last quarter also saw a ~27% selling at prices between $81 and $90. The stock currently trades at ~$93. There was a ~4% stake increase this quarter.Adobe Systems (ADBE): ADBE is a 3.60% 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. Last quarter saw a ~11% trimming while this quarter there was a similar increase. The stock is now at ~$380.Five Below (FIVE): FIVE is a 1.76% of the portfolio stake purchased last quarter at prices between $104 and $135. This quarter saw the position increased by ~40% at prices between $123 and $134. The stock is currently at ~$116Black Knight Inc. (BKI), Grocery Outlet (GO), and iShares 1-3 year treasury bond: These very small (less than 0.5% of the portfolio each) positions were increased during the quarter.Stake Decreases:United Technologies (UTX): UTX is a large (top three) ~9% of the portfolio position established in Q1 2019 at prices between $104 and $129. The stock currently trades at ~$154. Q2 2019 saw a ~7% trimming while this quarter there was a ~13% stake increase.Note: UTX has seen a previous roundtrip. A similarly sized large stake was disposed in Q4 2018 and the position was rebuilt next quarter.Campbell Soup (CPB): The large (top three) ~8% CPB stake was established in Q2 & Q3 2018 at prices between $35 and $42. There was a ~17% stake increase in Q1 2019 at prices between $32 and $41. The stock is now at $48.64. Last three quarters have seen a one-third reduction at prices between $35.80 and $49.50.Note 1: Regulatory filings since the quarter ended show them owning 12.5M shares (~4.1% of the business). This is compared to 14.4M hares in the 13F report.Note 2: CPB position is an activist stake. Third Point initially pursued the replacement of the entire 12-member board. They succeeded in replacing three board members and top management (CEO and CFO).Salesforce.com (CRM): The 4.11% CRM position was more than doubled in Q4 2018 at prices between $121 and $160. Last quarter saw the position almost doubled again at prices between $140 and $160. The stock is now at ~$190. This quarter saw a ~12% trimming.Burlington Stores (BURL): The 3.67% portfolio stake in BURL was established in Q2 2019 at prices between $146 and $177. The position saw a ~115% stake increase last quarter at prices between $168 and $205. The stock currently trades at $246. There was a ~7% trimming this quarter.Fox Corp (FOX): FOX is a ~2% of the portfolio position purchased in Q1 2019 at prices between $28.75 and $39.55 and the stock is now at $37.31. Last two quarters have seen a ~50% selling at prices between $30 and $38.Clear Channel Outdoor (CCO) and GTT Communications (GTT): These very small (less than 0.5% of the portfolio each) positions were reduced during the quarter.Kept Steady:Allergan plc (AGN): AGN is large (top five) merger arbitrage stake established last quarter at prices between $156 and $170. The stock currently trades at ~$198. In June, AbbVie (ABBV) agreed to acquire Allergan in a cash-and-stock ($120.30 per share cash and 0.8660 shares of ABBV for each share of AGN held). The transaction is expected to close this quarter (Q1 2020).Danaher Corp. (DHR): The ~6% 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 ~$166. There was a ~20% stake increase in Q1 2019 at prices between $98 and $132.Note: The prices quoted above are adjusted for the Fortive (FTV) spin-off in July 2016.Fidelity National Information Services (FIS): The ~4% 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 timeframe at a cost-basis of ~$70 per share. The FIS stake was also increased by ~25% last quarter at prices between $125 and $140. It currently trades at $157.Iqvia Holdings (IQV): The 3.55% IQV position was purchased in Q3 2018 at prices between $99 and $131 and increased by ~25% last quarter at prices between $143 and $162. The stock currently trades above that at ~$164.Visa Inc. (V): The 3.24% V stake was established in Q2 2018 at prices between $118 and $136. The stock is now well above that range at ~$210.Boston Scientific Corp (BSX): the 2.60% BSX stake was established in Q1 2019 at prices between $33 and $41. The stock is now at $42.31. There was a ~10% stake increase in Q2 2019 while last quarter saw similar trimming.S&P Global (SPGI): SPGI is a 2.51% position established in Q2 2016 at prices between $96 and $128. The position has wavered. Recent activity follows: the five quarters thru Q1 2019 saw a combined ~60% selling at prices between $164 and $213. The stock is now at ~$308. Since then, the activity has been minor.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. They control 24.9% of the business. Last month, FPAC merged with Global Blue in a $2.6B deal. Ex-NYSE (Intercontinental Exchange subsidiary) President Tom Farley is CEO.Centene Corp (CNC): The 1.73% CNC stake was purchased in May 2019 at around ~$55 per share compared to the current price of ~$65. Last quarter saw a ~4% trimming.Note: On Centene, it was reported that Third Point wants the company to consider selling itself before spending $15.3B for the acquisition of WellCare Health (WCG).Kadmon Holdings (KDMN): The minutely small 0.49% 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).Replay Acquisition Corp (RPLA) and Sony Corp (SNE): These very small (less than 0.5% of the portfolio each) positions were kept steady during the quarter.The spreadsheet below highlights changes to Loeb’s 13F stock holdings in Q4 2019:Regulatory filings thru 11/25/2019: 13D/A – 9/4 – CPB – 17.3M shares – 5.74%.Q3 2019 Letter, October Report, etc.: Performance – 14.5% annualized since 1996 inception compared to 8.5% for S&P 500 index. YTD up 12.7% compared to 20.6% for S&P. Commentary: EssilorLuxottica (ESLOY) - $700M investment in early 2019. Stock in the low-60s at the time – poor corporate governance framework and a dead-locked board are the focus of their activism. World’s largest eyecare company formed by the merger of a lens behemoth with a frames behemoth – wonderful synergy opportunities. Sony (SNE) – Disappointed with Sony’s conclusion of a strategic review in late September to maintain the status-quo – still engaged with management.Sony Letter & Presentation dated 6/13/2019 – $1.5B investment at ~$50 per share. recommends spinning off the semiconductor business which they believe should have a valuation of $35B in five years. Sees the stock trading at roughly half its intrinsic value. It was trading at ~$51 at the time."