"Tracking Dan Loeb’s Third Point Portfolio – Q4 2015 Update"
"Dan Loeb's 13F portfolio decreased from $10.60B to $9.86B this quarter. The number of positions decreased from 32 to 28.Third Point significantly increased Allergan plc while almost eliminating Kraft Heinz and Yum Brands during the quarter.The top-three 13F positions are Baxter International, Allergan plc, and Amgen which together is at ~53% 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 02/12/2016. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q3 2015.The 13F portfolio is very concentrated with the top-three holdings accounting for 52.84% of the entire portfolio. Recent 13F reports show around 30 long positions. This quarter, Loeb’s US long portfolio decreased ~7% from $10.60B to $9.86B. The number of holdings decreased from 32 to 28. Largest five individual stock positions are Baxter International, Allergan plc, Amgen Inc., Dow Chemical, and Mohawk Industries.As per their Q4 2015 investor letter, Third Point’s 2015 return was -1.4%. 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 equity exposure has increased four-fold to ~$4.5B. 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 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:Chubb Ltd. (CB) previously Ace Ltd. (ACE): CB is a 1.78% of the portfolio stake established this quarter. The stock currently trades at $114. Ace Limited acquired Chubb and that transaction closed last month. After the transaction, Ace Limited adopted the Chubb name.Morgan Stanley (MS) and Axalta Coating Systems (AXTA): MS is a small ~1% position established this quarter at prices between $31.29 and $35.41. AXTA is a very small 0.65% portfolio stake established this quarter at prices between $25.34 and $29.76. MS and AXTA currently trade below his purchase price ranges at $23.08 and $23.38 respectively.Stake Disposals:IAC Interactive (IAC): IAC was 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. The position was sold this quarter at prices between $59 and $72. The stock currently trades at $41.49.T-Mobile US (TMUS): TMUS was a 3.19% of the US long portfolio stake established in Q2 2015 at prices between $31.49 and $40.24 and increased by ~13% last quarter at prices between $36.50 and $43.03. This quarter saw the elimination at prices between $34.56 and $41.38. The stock currently trades at $35.11.Note: TMUS had 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 and 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).NXP Semiconductors (NXPI): NXPI was a 1.60% portfolio stake that was sold this quarter. In March 2015, NXP agreed to acquire Freescale Semiconductor (FSL) and that transaction closed in December.Stake Increases:Allergan plc (AGN) previously Actavis plc: AGN is the second-largest individual stock position at 17.12% 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 another ~47% increase at prices between $253 and $322. The stock currently trades at $280.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.Dow Chemical (DOW): DOW is currently Third Point’s fourth-largest individual stock position at 13.18% 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 three quarters have seen minor increases. The stock currently trades at $46.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. In December 2015, Dow and DuPont (DD) announced a merger of equals with plans to separate into three businesses after the merger.J M Smucker (SJM): The 2.06% SJM position was purchased in Q1 2015 at prices between $100 and $116. The stake saw a ~27% increase this quarter at prices between $112 and $125. The stock is now at $127.Time Warner Cable (TWC): TWC is a 2.64% portfolio stake purchased last quarter at prices between $174 and $193. This quarter saw a ~8% increase. The stock is now at $185.Note: Time Warner Cable is being acquired by Charter Communications (CHTR). In May 2015, CHTR offered a cash-and-stock deal valued at $195 per share ($100 cash).Stake Decreases: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 third-largest stake at 14.89% of the US long portfolio. This quarter saw a ~8% trimming. The stock currently trades at $145.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.Anheuser Busch (BUD) & Calls: BUD is a 1.77% 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. The following four quarters had seen a combined ~70% increase at prices between $106 and $127 while last quarter saw a ~12% trimming at prices between $104 and $129. This quarter, the position was reduced by another ~47% at prices between $106 and $129. The stock currently trades at $115.Avago Technologies (AVGO): The 2.21% AVGO stake was purchased last quarter at prices between $109 and $138. It currently trades at $122. This quarter saw a ~9% trimming.Constellation Brands (STZ) & Calls: The 2.07% STZ position was first purchased in 2012 and had only seen marginal activity since. Last five quarters saw a combined ~26% 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 1.11% 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. Last quarter saw a ~18% decrease at prices between $24 and $29 and that was followed with a ~56% reduction this quarter at prices between $24 and $30. The stock currently trades at $22.49.Note: eBay spun-off PayPal (PYPL) in July 2015. The prices quoted above are adjusted for the spinoff.Kraft Heinz Co. (KHC): KHC was a fairly large 5.49% of the US long portfolio stake established last quarter at prices between $69.20 and $80.48. This quarter, the position was almost sold out at prices between $69.69 and $79.94. The stock currently trades at $71.92.Note: Kraft Heinz started trading in July following the merger of Heinz with Kraft Foods Group engineered by 3G Capital and Berkshire Hathaway.Mohawk Industries (MHK): The 4.08% 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. Q2 2015 had seen another one-third increase at prices between $174 and $194. Last quarter saw a ~10% trimming at prices between $176 and $211. The stock currently trades at $155. There was a marginal reduction this quarter.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 CEOMolson Coors Brewing (TAP): The 1.91% TAP stake was established in Q2 2015 at prices between $69.81 and $78.67 and more than doubled last quarter at prices between $65.19 and $84.38. The stock currently trades at $84.14. This quarter saw a ~7% trimming.Roper Technologies (ROP) formerly Roper Industries: The 2.79% 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. The stock currently trades at $164. This quarter saw a ~9% trimming.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.Yum! Brands (YUM) & Calls: YUM was a large top-five stake as of last quarter. It was established in Q1 2015 at prices between $70 and $82. Last quarter saw a huge ~200% increase at prices between $76 and $92. This quarter, the position was almost eliminated at prices between $67.12 and $83.42. The stock is now at $67.34. The about-turn in a large position indicates a clear bearish bias.Note: Loeb’s Q4 2015 letter indicated they have reduced exposure to companies tied to China.Kept Steady:Baxter International (BAX): BAX is Loeb’s largest position at 20.84% of the US long portfolio.  The stake was established in Q2 2015 and increased substantially last quarter at a cost-basis of $40.44. The stock currently trades at $36.61. For investors attempting to follow Loeb, BAX is a good option to consider for further research.Danaher Corp. (DHR): The 2.12% DHR stake was established last quarter at prices between $82.40 and $92.96 and it is currently at $84.92.Green Brick Partners (GRBK): GRBK is a very small 0.59% stake. Dan Loeb controls ~25% of Green Brick Partners (previously BioFuel Energy).Liberty Global (LBTYA) (LBTYK): LBTYK is a 2.07% of the US long portfolio position. It has been in the portfolio since 2011. Q2 2015 saw a ~14% reduction at prices between $48.22 and $54.41. The stock currently trades at $31.55.Sealed Air Corp. (SEE): SEE is a 2.37% of the portfolio stake established in Q2 2015 at prices between $43.80 and $52.60. The stock currently trades just below the low end of that range at $43.24.Sotheby’s (BID): BID is a 1.74% 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 $20.26. For investors attempting to follow Third Point, BID is a good option to consider for further research.Note: BID is an activist stake. Third Point has three board seats and in March 2015 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), Citigroup Warrants (C.WS.A), Enphase Energy (ENPH), Clayton Williams Energy Inc. (CWEI), and a debt holding - Cobalt International Energy (CIE) notes.Note: Loeb controls 10.72% of Apigee, ~3.3% of Clayton Williams Energy, and ~14% of Enphase Energy. A 2/12/2016 13G filing also shows Third Point owning 10.25M shares (5.6% of business) of Nomad Foods (NOMD).The spreadsheet below highlights changes to Loeb’s US stock holdings in Q4 2015:"