"Tracking Dan Loeb’s Third Point Portfolio – Q2 2019 Update"
"Dan Loeb's 13F portfolio value decreased from $8.99B to $8.54B this quarter. The number of positions increased from 31 to 42.Third Point doubled Chemours while dropping DowDuPont.The top three positions are Baxter International, United Technologies, and Campbell Soup. They are at ~40% 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 08/13/2019. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q1 2019.The 13F portfolio is very concentrated with the top three holdings accounting for ~40% of the entire portfolio. Recent 13F reports show around 35 long positions. This quarter, Loeb’s portfolio value decreased ~5% from $8.99B to $8.54B. The number of holdings increased from 31 to 42. The largest five individual stock positions are Baxter International, United Technologies, Campbell Soup, Danaher Corp, and PayPal.Per their Q2 2019 letter, Third Point gained 3.8% for the quarter compared to 4.3% for the S&P 500 Index. Annualized returns since December 1996 inception are at 14.7% compared to 8.2% 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:Centene Corp (CNC) and Burlington Stores (BURL): These are new medium-sized positions established this quarter. The 1.54% CNC stake was purchased in May at around ~$55 per share compared to the current price of $49.73. For investors attempting to follow Third Point, CNC is a good option to consider for further research. The 1.39% portfolio position in BURL was established at prices between $146 and $177 and the stock currently trades at $174.Note: On Centene, it was reported in May that Third Point wants the company to consider selling itself before spending $15.3B for the acquisition of WellCare Health (WCG).Tradeweb Markets (TW), Pinterest Inc. (PINS), Zoom Video Communications (ZM), Parsons Corp (PSN), Replay Acquisition Corp (RPLA), CrowdStrike Holdings (CRWD), and Grocery Outlet (GO): These are very small positions (less than ~0.5% of the portfolio each) established this quarter. Each had an IPO during the quarter.GTT Communications (GTT), AmeriCold Realty (COLD), Clear Channel Outdoor (CCO), Twilio Inc. (TWLO), VICI Properties (VICI), Linx S A (LINX) ADR, and Franks International (FI): These are very small (less than 0.5% of the portfolio each) positions purchased during the quarter. Linx, an ERP Software vendor from Sao Paulo, Brazil launched ADRs in May.Stake Disposals:DowDuPont (DWDP): DWDP was 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 remaining stake was disposed during the quarter.Note 1: DowDuPont completed the previously announced three-way split in May following which the shares of Dow (DOW), DuPont (DD), and Corteva (CTVA) started trading.Note 2: 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 3: DowDuPont was 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.Constellation Brands (STZ): The fairly large 4.32% STZ position was established in 2012 at very low prices. The position had wavered since 2016. Recent activity follow: There was a ~27% reduction in Q4 2018 at prices between $157 and $229 and that was followed with a ~40% selling last quarter at prices between $151 and $178. The disposal this quarter was at prices between $177 and $213. The stock is currently at ~$197. Loeb harvested huge long-term gains.American Express (AXP): AXP was a fairly large ~4% portfolio stake established in Q3 2018 at prices between $98 and $111. Q4 2018 saw a 42% selling at prices between $89.50 and $113 and that was followed with a ~50% reduction last quarter at prices between $93 and $114. The elimination this quarter was at prices between $110 and $125. The stock is now at $126.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.Celgene Corp (CELG) and Intl Flavors & Fragrances (IFF) Puts: These are small (less than ~2% of the portfolio each) positions established last quarter but disposed this quarter.Stake Increases:Fox Corp (FOX): FOX is a 4.51% of the portfolio position purchased last quarter at prices between $28.75 and $39.55 and the stock is now at $35. There was a ~8% stake increase this quarter.Adobe Systems (ADBE): ADBE is a 3.19% 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 $293. This quarter saw a minor ~3% further increase.Boston Scientific Corp (BSX): the 2.77% BSX stake was established last quarter at prices between $33 and $41. That was followed with a ~10% increase this quarter. The stock is now at $42.86.Marathon Petroleum (MPC), Netflix Inc. (NFLX), and Microsoft Corp. (MSFT): The 2.67% MPC stake was purchased last quarter at prices between $57.50 and $67 and increased by ~14% this quarter at prices between $46 and $64. The stock is now near the low end of those ranges at $47.15. NFLX is a 2.15% position established last quarter at prices between $268 and $378 and increased by ~25% this quarter at prices between $337 and $385. The stock now goes for $312. MSFT is a small 0.94% position purchased last quarter and increased by ~20% this quarter at prices between $97 and $138. The stock is currently at ~$139.Note: These three have seen previous round-trips. The stakes were at 2.18%, 3.64%, and 3.65% respectively as of Q3 2018 but were disposed next quarter.Salesforce.com (CRM): The 2.31% CRM position was more than doubled in Q4 2018 at prices between $121 and $160. This quarter also saw a ~11% stake increase. The stock is now at $144.Chemours Co (CC): The 1.23% CC stake established last quarter at prices between $29 and $41 saw a stake doubling this quarter at prices between $21 and $41. The stock currently trades well below those ranges at $12.60.Ross Stores (ROST): ROST is a 1.66% portfolio stake established last quarter at prices between $83 and $95. The stock is now well above that range at ~$106. The position saw a minor ~3% stake increase during the quarter.Stake Decreases:Baxter International (BAX): BAX is Loeb’s largest position at ~22% of the 13F portfolio. The stake was established in Q2 2015 and increased substantially the following quarter. Recent activity follow: December 2018 saw a ~22% selling (8M shares) at $68.62 and that was followed with another ~18% selling (5M shares) this quarter at $76.37. Both these were block trades. Loeb’s cost-basis on BAX is $40.05. The stock currently trades at $88.18. Loeb is harvesting huge long-term gains.Note: Third Point still controls 4.5% of the business.United Technologies (UTX): UTX is a large (top three) ~9% of the portfolio position established last quarter at prices between $104 and $129. The stock currently trades at $129. This quarter saw a ~7% trimming.Note: UTX has seen a previous roundtrip. A similarly sized large stake was disposed in Q4 2018 and the position was rebuilt last quarter.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 $42.26. There was a ~12% trimming this quarter.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 ~6%.Iqvia Holdings (IQV): The 3% IQV position was purchased in Q3 2018 at prices between $99 and $131 and the stock currently trades above that at $157. This quarter saw a ~2% trimming.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 three quarters.Kept Steady: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 ~$141. There was a ~20% stake increase last quarter at prices between $98 and $132.Note: The prices quoted above are adjusted for the Fortive (FTV) spin-off in July 2016.PayPal Holdings (PYPL): PYPL is a 4.69% of the portfolio stake established in Q2 2018 in the low-80s. The stock is currently at ~$106. The stake saw a ~55% reduction in Q4 2018 at prices between $75 and $89 and that was followed with a ~13% trimming last quarter.Sotheby’s (BID): BID is a 4.53% 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. Third Point’s ownership stake in BID is ~14%. In June, the stock spiked following an acquisition agreement at $57 per share in a going-private transaction. The stock is currently trading over that at $58.56 as there is speculation that there will be a competing offer.Note: BID is an activist stake and Third Point has three board seats.Worldpay Inc. (WP): WP is a ~3% portfolio stake built in H2 2017 at prices between $60 and $76. There was a ~30% reduction in Q2 2018 at prices between $78 and $85. Last quarter also saw a ~14% selling.Note: Fidelity National Information Services (FIS) agreed to acquire WorldPay in a cash-and-stock transaction (0.9287 FIS shares and $11 cash for each share held) announced in March. The transaction closed on July 31st. FIS currently trades at ~$135.Visa Inc. (V): The ~3% V stake was established in Q2 2018 at prices between $118 and $136. The stock is now well above that range at ~$179.S&P Global (SPGI): SPGI is a 2% position established in Q2 2016 at prices between $96 and $128. The position has wavered. Recent activity follow: Last five quarters had seen a combined ~58% reduction at prices between $164 and $213. The stock is now at ~$258.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 0.23% 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).Black Knight Inc. (BKI), Sony Corp (SNE), and Colfax Corp (CFX): These are small (less than ~1.25% of the portfolio each) positions established last quarter and kept steady this quarterThe spreadsheet below highlights changes to Loeb’s 13F stock holdings in Q2 2019:4/17/2019 - : Performance: 8.81% in Q1 2019 compared to 13.6% for S&P 500 index, 14.7% since 1996 inception compared to 8.1% for S&P 500 index.Regulatory Filings thru 5/27/2019: 13D/A – 5/10 – BID -  6.67M shares – 14.3% of business, 13D/A – 5/17 – BAX – 23M shares – 4.5% of business, Form 4 – 5M disposed at $76.37."