"Tracking Dan Loeb’s Third Point Portfolio – Q2 2015 Update"
"Dan Loeb's 13F portfolio decreased from $10.82B to $10.68B this quarter. The number of positions increased from 41 to 43.Third Point established a large stake in Baxter International while reducing Ally Financial.The top-three 13F positions are Amgen Inc. (12.94%), Dow Chemical (11.02%), and Allergan plc (9.38%) which together is at over one-third of the entire 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 08/14/2015. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q1 2015.The 13F portfolio is very concentrated with the top-three holdings accounting for 33.34% of the entire portfolio. Recent 13F reports show around 40+ long positions. This quarter, Loeb’s US long portfolio decreased marginally from $10.82B to $10.68B. The number of holdings increased from 41 to 43. Largest five individual stock positions are Amgen Inc., Dow Chemical, Allergan plc, eBay Inc, and Mohawk Industries.As per their Q2 2015 investor letter, Third Point’s YTD return was 4.9%. Annualized return since December 1996 (inception) is at 17.1%. In addition to partner stakes, Third Point also invests the float of Third Point Reinsurance (TPRE).New Stakes:Baxter International (BAX): BAX is a 2.91% of the US long portfolio stake established this quarter. The stock currently trades at $39.58.Note 1: An August 5th 13D regulatory filing shows Third Point owning 52.5M shares (9.6% of the business) at a cost-basis of $40.44. It is now their largest position by far valued at well over $2B.Note 2: Baxalta Inc. (BXLT) was spun-off from Baxter International in June. BAX shareholders received one share of BXLT for each share of BAX held. BAX retained 19.5% of the business. Earlier this month, BXLT stock spiked ~20% as Shire plc (SHPG) made a hostile bid valued at ~$45 per share. The stock is now at $39.70.Devon Energy (DVN): DVN is a 2.09% of the US long portfolio stake established this quarter at prices between $58.82 and $69.03. The stock currently trades well below that range at $42.81.Note: The DVN position was profiled in Loeb’s Q1 2015 letter to shareholders. He believes market is undervaluing Devon’s US E&P business by $25 to $35 per share. Also, the letter encouraged management to focus on top-tier US assets in the Permian Basin, Eagle Ford, and Cana-Woodford.T-Mobile US (TMUS): TMUS is a 2.72% of the US long portfolio stake established this quarter at prices between $31.49 and $40.24. The stock currently trades at $40.74.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).Sealed Air Corp. (SEE): SEE is a 2.33% of the portfolio stake established this quarter at prices between $43.80 and $52.60. The stock currently trades at $53.07.iShares China Large Cap ETF (FXI), Molson Coors Brewing (TAP), Perrigo Company plc (PRGO), Telefonica Brasil ADR (VIV), and Williams Companies (WMB): These are very small (less than ~1% of the portfolio each) positions established this quarter.Note: WMB has 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 Disposals:Dollar General (DG): DG was first purchased in 2012 and the position had wavered since. The stake was at 2.79% of the portfolio last quarter. Last significant activity was a one-third increase in Q2 2014 at prices between $53.50 and $62.82. This quarter, the position was sold at prices between $72.59 and $79.55. The stock currently trades at $80.25.Note: Dollar General was involved in a hostile takeover of Family Dollar. In January, they formally ended the process as Dollar Tree (DLTR) succeeded in gaining shareholder approval in their bid for Family Dollar.Fleetcor Technologies (FLT): FLT was a minutely small position in Q3 2014. It was increased substantially in Q4 2014 at prices between $123 and $156. Last quarter also saw a ~27% increase at prices between $137 and $157. This quarter the position was eliminated at prices between $151 and $164. The stock currently trades at $157.iShares Russell 2000 ETF (IWM) Puts: This was a fairly large (nominal value) 4.60% of the portfolio position established last quarter and eliminated this quarter. IWM traded between $115 and $126 last quarter and between $121 and $129 this quarter. It currently trades at $116.Maxim Products (MXIM), McKesson Corporation (MCK), and Precision Castparts (PCP): These are very small ~1% positions established this quarter.Note: Earlier this month, Berkshire Hathaway (BRK.A) (BRK.B) agreed to buy PCP in a $235 per share cash-deal.Stake Increases:IAC Interactive (IACI): IACI is a 2.05% 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. This quarter saw another ~15% increase at prices between $67.16 and $81.19. The stock currently trades at $71.15.Mohawk Industries (MHK): The 4.29% (top-five) MHK position was established in Q4 2014 at prices between $125 and $158. It was increased by ~180% last quarter at prices between $153 and $186 and another ~32% this quarter at prices between $174 and $194. The stock currently trades at $204.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 CEOSunedison Inc. (SUNE): SUNE is a 3.48% position established in Q3 2014 at prices between $18.88 and $24.05 and increased by ~88% in Q4 2014 at prices between $14.30 and $22.86. Last quarter had seen a ~10% reduction while this quarter saw a ~23% increase at prices between $24 and $32. The stock currently trades well below his purchase price ranges at $12.10.Yum! Brands (YUM) & Calls: YUM is a 3.12% of the US long portfolio stake established last quarter at prices between $70 and $82 and increased by ~12% this quarter at prices between $78 and $95. The stock currently trades at $81.82.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.Anheuser Busch (BUD) & Calls: BUD is a 3.39% 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 have seen a combined ~70% increase at prices between $106 and $127. The stock currently trades at $112. The aggressive build-up indicates a clear bullish bias.Dow Chemical (DOW): DOW is currently Third Point’s second-largest individual stock position at 11.02% 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. This quarter saw a minor increase. The stock currently trades at $43.66.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.Clayton Williams Energy (CWEI), FedEx Corporation (FDX), Green Brick Partners (GRBK), NXP Semiconductors (NXPI), and J M Smucker (SJM): These are very small (less than ~1% of the portfolio each) positions increased this quarter.Note 1: Dan Loeb controls ~25% of Green Brick Partners (previously BioFuel Energy) and 8.2% of Clayton Williams Energy.Note 2: In March, NXP agreed to acquire Freescale Semiconductor (FSL).Stake Decreases:Ally Financial (ALLY): ALLY is a 2.10% of the US long portfolio stake. 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 last quarter saw a further ~13% reduction at prices between $18.71 and $23.88. This quarter the selling accelerated: ~62% reduction at prices between $19.95 and $23.66. The stock currently trades at $21.45 compared to the IPO price of $24.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 largest stake at 12.94% of the US long portfolio. Last two quarters have seen a combined ~15% trimming at prices between $150 and $170. The stock currently trades at $161.Note: Dan Loeb has said AMGN was the biggest winner in the portfolio for 2014. The 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).Delta Air Lines (DAL): The ~1% DAL position was established in Q4 2014 at prices between $30.90 and $49.23 and increased by just over one-third last quarter at prices between $41.64 and $50.74. This quarter the pattern reversed: ~48% reduction at prices between $40.57 and $47.40. The stock currently trades at $45.73.Edgewell Personal Care (EPC) previously Energizer Holdings: A ~1.41% ENR position was established in Q3 2014 in the $85 to $93 price-range. It was almost eliminated this quarter at prices between $101 and $107.Note: Energizer spun-off its Household Products business, renamed the remaining Personal Care products business as Edgewell Personal Care, and named the SpinCo as Energizer Holdings (ENR) last month. The prices quoted above are adjusted to account for the spinoff.Liberty Global (LBTYA) (LBTYK): LBTYK is a 2.37% of the US long portfolio position. It has been in the portfolio since 2011. This quarter saw a ~14% reduction at prices between $48.22 and $54.41. The stock currently trades at $46.78.Masco Corporation (MAS): MAS is 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% in Q2 2014 at prices between $19.54 and $22.89 and another ~24% in Q4 2014 at prices between $20.86 and $25.40. This quarter, half the stake was sold at prices between $25.65 and $27.92. The stock currently trades at $27.24.Phillips 66 (PSX): PSX is 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% last quarter at prices between $59 and $80 and another ~19% this quarter at prices between $76.79 and $81.63. The stock currently trades at $79.53.Sensata Technologies (ST): ST is a small 0.71% of the US long portfolio position. It was established in Q1 2014 at prices between $36.78 and $42.90. The stake 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. This quarter, almost two-thirds of the remaining stake was sold at prices between $52.56 and $58.66. The stock currently trades at $47.84.Allergan plc (AGN) previously Actavis plc: AGN is the third-largest individual stock positon at 9.38% 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. This quarter saw a ~8% reduction. The stock currently trades at $308.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.Constellation Brands (STZ) & Calls: The 2.15% STZ position was first purchased in 2012 and has only seen marginal activity since. Q4 2014 saw a ~4% reduction and this quarter saw another ~5% 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): EBAY is a large top-five position at 6.21% 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. Last quarter saw another 15% increase at prices between $20.67 and $23.72. This quarter saw a minor decrease. The stock currently trades at $26.52.Note 1: eBay has seen significant super-investor interest as both Carl Icahn and Seth Klarman added stakes.Note 2: eBay spun-off PayPal (PYPL) last month. The prices quoted above are adjusted for the spinoff.Roper Technologies (ROP) formerly Roper Industries: The 2.54% ROP stake was purchased in Q1 2014 at prices between $132 and $142. It was increased by ~23% last quarter at prices between $146 and $174. This quarter saw a ~6% reduction. The stock currently trades at $166.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.Kept Steady:American International Group (AIG): AIG is a 2.03% of the US long portfolio stake established in Q4 2014 at prices between $49.40 and $56.51. The stock currently trades at $61.71.Note: 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.Enphase Energy (ENPH): ENPH has been in the portfolio since its 2012 IPO. Third Point’s investment in the company goes back to January 2007 when they sponsored the company’s entire first round of Series B funding of $4.5M for a 42% stake. The current stake is at ~14% of the company. Loeb revealed that at the time of IPO, the investment already had a ~20% IRR. It has been a volatile stock since trading between $2 and $17. It currently trades at $4.51.Intrexon Corporation (XON): The original XON stake was acquired in 2011 when the company was private. The position is very small at 1.23% of the US long portfolio. The stock currently trades at $42.50 compared to the Q3 2013 IPO price of $29.Sotheby’s (BID): BID is a 2.82% 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 $36.86. For investors attempting to follow Third Point, BID is a very 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.The 13F portfolio also has the following minutely small (less than 0.5% of the portfolio each) stakes: Apigee Corp. (APIC), Charter Communications (CHTR), Citigroup Warrants (C.WS.A), Nokia Corp. (NOK), Ziopharm Oncology (ZIOP), and a debt holding - Cobalt International Energy (CIE) notes.Note 1: Loeb controls ~11% of Apigee.Note 2: The following minutely small stakes are new this quarter: Apigee Corp, Charter Communications, Nokia, and Ziopharm Oncology. Also, the following minutely small positions as of last quarter were eliminated this quarter: Energy Transfer Equity LP (ETE), JD.com (JD), and Moelis (MC).The spreadsheet below highlights changes to Loeb’s US stock holdings in Q2 2015:"