"Tracking Dan Loeb’s Third Point Portfolio – Q2 2016 Update"
"Dan Loeb's 13F portfolio decreased from $10.86B to $10.49B this quarter. The number of positions increased from 37 to 40.Third Point added a large position in Facebook along with several other smaller positions during the quarter. The Amgen stake was dropped.The top three 13F positions are Baxter International, Allergan plc, and Dow Chemical which together is at ~44% 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 08/12/2016. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q1 2016.The 13F portfolio is very concentrated with the top-three holdings accounting for 43.74% of the entire portfolio. Recent 13F reports show around 40 long positions. This quarter, Loeb’s US long portfolio decreased 3.36% from $10.86B to $10.49B. The number of holdings increased from 37 to 40. Largest five individual stock positions are Baxter International, Allergan plc, Dow Chemical, Facebook, and Danaher.Per their Q2 2016 investor letter, Third Point returned 4.6% in the quarter. Annualized returns since December 1996 inception are at 15.9%. 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:Facebook Inc. (FB): FB is a top-five 4.08% of the portfolio stake established this quarter at prices between $109 and $121 and the stock is now just outside that range at $125.Charter Communications (CHTR): CHTR is a fairly large 3.16% of the portfolio position established this quarter. Around 40% of the shares were acquired as a result of the merger of Charter Communications and Time Warner Cable that closed in May - Third Point had around 1.2M shares of Time Warner Cable as of Q1 2016. The remaining shares were purchased this quarter at prices between $198 and $233. The stock is now at $259.Monsanto Co. (MON), S&P Global (SPGI), Sherwin Williams (SHW), and Shire plc (SHPG): These are small (less than ~2% of the portfolio each) positions established this quarter. The ~2% MON stake was purchased at prices between $87 and $113 and it is now at $105. SPGI is a 1.64% position established at prices between $96 and $112 and the stock is now above that range at $120. The 1.96% SHW stake was acquired at prices between $280 and $300 and the stock is currently at $296. The 1.67% SHPG stake came about as a result of Shire’s acquisition of Baxalta that closed this quarter. Third point had 6M shares for which they received SHPG shares in the ratio 1: 0.1482.Note: Monsanto spurned a recent acquisition offer from Bayer AG (BAYRY).Activision Blizzard (ATVI), Ametek Inc. (AME), Coca Cola European Partners (CCE), Grupo Supervielle SA (SUPV), Harris Corp. (HRS), Liberty Global (LBTYA), Marathon Oil (MRO), Union Pacific (UNP), and Whiting Petroleum (WLL): These are very small (less than 1% of the portfolio each) stakes purchased this quarter.Note: Liberty Global is back in the portfolio after a quarter’s gap: It was a 2.07% position established in 2011. Q2 2015 saw a ~14% reduction at prices between $48.22 and $54.41 and the remaining stake was sold last quarter at prices between $30.32 and $40.77. The stock currently trades at $31.53.Stake Disposals:Amgen Inc. (AMGN): A very small stake in AMGN was established in Q2 2014. It was increased by ~ 200% in Q3 2014 at prices between $115 and $144 and another ~700% in the following quarter at prices between $130 and $172. At the time, it was their largest holding at 15.34% of the portfolio. Q4 2015 saw a ~8% trimming while last quarter saw a further two-thirds stake reduction at prices between $141 and $162. The remaining position was disposed of this quarter at prices between $145 and $164. The stock currently trades at $173.Broadcom Ltd. (AVGO) previously Avago Technologies: The 1.85% AVGO stake was purchased in Q3 2015 at prices between $109 and $138. The disposal this quarter was at prices between $140 and $165. It currently trades at $173. Last two quarters had also seen a ~20% combined reduction.Baxalta Inc. (BXLT): BXLT was a 2.23% of the portfolio merger-arbitrage stake established last quarter. Shire plc (SHPG) acquired BXLT in a cash-and-stock deal ($18 cash and 0.1482 shares of SHPG for each share held) that closed in June.Roper Technologies (ROP) formerly Roper Industries: The 2.27% 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 disposal this quarter was at prices between $165 and $185. The stock currently trades at $173. Third Point harvested gains. Last two quarters had also seen a ~16% combined reduction.Signet Jewelers (SIG) & Calls: The 1.73% stake in SIG was established last quarter at prices between $95 and $133 and disposed of this quarter at prices between $79.26 and $124. The stock is now at $91.22.J M Smucker (SJM): The 0.93% SJM position was purchased in Q1 2015 at prices between $100 and $116. The stake saw a ~27% increase in Q4 2015 at prices between $112 and $125. Last quarter saw an about-turn: ~53% stake reduction at prices between $118 and $130. The elimination this quarter was at prices between $125 and $152. The stock is now at $153.Time Warner Cable (TWC): TWC was a 2.26% portfolio stake purchased in Q3 2015 at prices between $174 and $193. The following quarter saw a ~8% increase while last quarter saw a ~14% reduction. Time Warner Cable got acquired by Charter Communications (CHTR) and the deal closed in May.VMWare Inc. (VMW): The very small 0.58% stake in VMW was established last quarter but sold out this quarter.Stake Increases:Allergan plc (AGN) previously Actavis plc: AGN is the second-largest individual stock position at 11.89% 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. Q4 2015 saw another ~47% increase at prices between $253 and $322. The stock currently trades at $250. There was a ~7% trimming last quarter while this quarter saw a ~8% increase.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.Anheuser Busch (BUD) & Calls: BUD is a 2.38% 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 Q3 2015 saw a ~12% trimming at prices between $104 and $129. In Q4 2015, the position was reduced by another ~47% at prices between $106 and $129. The pattern reversed again last quarter: ~25% increase at prices between $112 and $127. The stock currently trades at $126. This quarter saw a ~7% further increase.Note: The investment in BUD is profiled in Third Point’s Q1 2016 partner letter. They believe the acquisition of SABMiller (SBMRY) will allow BUD to perform well over the next several years.Constellation Brands (STZ) & Calls: The 3.15% STZ position was first purchased in 2012. Last two quarters have seen a combined ~23% increase at prices between $135 and $165. The previous five quarters had seen a ~26% reduction.Note: STZ investment is profiled in Third Point’s Q2 2015 partner letter. The thesis was that even after the tremendous price appreciation over the previous three years, the stock still traded 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. At the time, the stock traded at ~$117 compared to the current price of $166 -  ~42% return in just over a year.Danaher Corp. (DHR): The top-five 3.71% DHR stake was established in Q3 2015 at prices between $60.90 and $71.46 and increased by ~65% last quarter at prices between $62.09 and $73.79. It is currently at $81.39. This quarter saw a marginal ~4% further increase.Note: The investment in DHR is profiled in Third Point’s Q1 2016 partner letter. They believed the spinoff of Fortive (FTV) that closed last month will unlock significant value. The prices quoted above are adjusted for that transaction.TransDigm Group (TDG): TDG is a 2.03% position purchased last quarter at prices between $187 and $230 and increased by ~13% this quarter at prices between $219 and $267. The stock currently trades at $283.Nomad Foods (NOMD): NOMD is a very small 0.96% position established last quarter. The stake saw a marginal increase this quarter. Third Point controls ~7% of NOMD.Stake Decreases:Alphabet Inc. (GOOG): GOOG is a 2.68% stake established last quarter at prices between $678 and $765 and reduced by ~43% this quarter at prices between $668 and $767. The stock is currently at $783.Note: GOOG has seen a previous roundtrip in the portfolio. A fairly large 3.44% of portfolio stake was sold in Q2 2014 at prices between $510 and $579. That position was from Q3 2013 at prices between $423 and $435.Baxter International (BAX): BAX is Loeb’s largest position at 22.37% of the US long portfolio. The stake was established in Q2 2015 and increased substantially the following quarter at a cost-basis of $40.44. The stock currently trades at $48.59.Chubb Ltd. (CB) previously Ace Ltd.: CB is a 2.93% of the portfolio stake established in Q4 2015 and increased by ~60% last quarter at prices between $101 and $123. The stock currently trades just above that range at $126. This quarter saw a marginal ~2% reduction.Note 1: Ace Limited acquired Chubb and it closed in January. After the transaction, Ace Limited adopted the Chubb name.Note 2: The investment in Chubb is profiled in Third Point’s Q1 2016 partner letter. They believe the combined business has double-digit earnings growth potential over the next few years.Dow Chemical (DOW): DOW is currently Third Point’s third-largest individual stock position at 9.48% 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 an additional ~20% reduction at prices between $48.50 and $53.68. The stock currently trades at $52.33.Note: DOW is an activist stake. In December 2015, Dow and DuPont (DD) announced a merger of equals with plans to separate into three businesses after the merger.EMC Corporation (EMC): EMC is a small 1.55% merger-arbitrage stake established last quarter. Dell is acquiring EMC for $24.05 per share in cash and 0.111 per share in VMWare (VMW) tracking stock. This quarter saw a ~14% trimming.Mohawk Industries (MHK): The 2.71% MHK position was established in Q4 2014 at prices between $125 and $158 and 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 three quarters saw a combined ~17% reduction at prices between $152 and $211. This quarter saw another ~25% selling at prices between $178 and $201. The stock currently trades at $212. Loeb is harvesting gains.Molson Coors Brewing (TAP): The 0.96% TAP stake was established in Q2 2015 at prices between $69.81 and $78.67 and more than doubled the following quarter at prices between $65.19 and $84.38. This quarter saw a ~54% reduction at prices between $92.30 and $104. The stock currently trades at $99.79.Sealed Air Corp. (SEE): SEE is a 1.97% of the portfolio stake established in Q2 2015 at prices between $43.80 and $52.60. The stock currently trades at $46.91. Last quarter saw a ~5% trimming while this quarter saw an additional ~10% reduction.Yum! Brands (YUM) & Calls: YUM was a large position established in Q1 2015 at prices between $70 and $82 and increased by ~200% in Q3 2015 at prices between $76 and $92. In Q4 2015, the position was almost eliminated at prices between $67.12 and $83.42. It was built back up to a top-five 5.28% of the portfolio stake last quarter at prices between $65 and $82. This quarter, the pattern reversed again: around two-thirds reduction at prices between $79.33 and $85.90. The stock is now at $89.96.Kept Steady:Lowes Cos (LOW): The 2.26% LOW stake was established last quarter at prices between $63 and $76. The stock is now at $81.72.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 $39.89 - it has doubled from the February lows. Third Point’s ownership stake in BID is at 10.75%.Note: BID is an activist stake. Third Point has three board seats and in March 2015 Tad Smith was appointed as the new CEO.Green Brick Partners (GRBK): GRBK is a very small 0.56% 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), Devon Energy (DVN), Enphase Energy (ENPH), General Dynamics (GD), and Tesoro Corporation (TSO).Note 1: Loeb controls ~10.5% of Apigee and ~13.4% of Enphase Energy.Note 2: Latest regulatory filings also show Third Point owning ~17% of Kadmon Holdings (KDMN). The bulk of the stake is from prior to its IPO last month. The biopharma was founded in 2010 by Sam Waksal. While at ImClone Systems which he also founded, Sam Waksal was convicted for insider trading (2003) and put in prison for 7 years.The spreadsheet below highlights changes to Loeb’s US stock holdings in Q2 2016:: Performance: down 2.3% compared to up 1.3% for the S&P 500.: 2/2016 - Equity Shorts increased 4-fold to $4.5B. Performance: Q4 2015: up 3.2% compared to up 7% for S&P 500. 2015: down 1.4% compared to up 1.4% for S&P 500.13G/D/A, Form 3/4 thru 2/14/2016: Nomad Foods - NOMD - 2/12/2016 13G - 10.25M shares - 5.6%. Apigee Corp - APIC - 2/12/2016 13G - 3.17M shares - 10.72%.13G/D/A, Form 3/4 since 8/15/2015: 10/1/2015 Form 4 BAX - 53,851,790 shares. 13D/A 9/30/2015 BAX - 53,850,000 shares - 9.9% of business."