Dan Loeb's Third Point recently filed a 13-F with the SEC. The fillings are required to be filled within 45 days after the end of the quarter. Dozens of famous investors recently filled 13-Fs, and we hope to provide more coverage on their latest position changes.
The 13-F reveals common equity, convertible equity holdings, but lots of information is missing. Since we have access to Loeb's letters and stat sheets, we were curious about his portfolio changes. Additionally, Loeb bought more Apple Inc. (NASDAQ:AAPL), which he detailed the bullish case for in his latest letter. Also with our constant coverage of the Yahoo! Inc (NASDAQ:YHOO), which Loeb appeared to win, we were curious if he added to his stake.
It appears that Loeb did up his stake:
In the first quarter of 2012, Loeb's Third Point bought 71 million shares in Yahoo! Inc (NASDAQ:YHOO), according to the filing.
Loeb has not detailed why he likes the search engine Google, but it is second favorite holding of hedge funds. Charlie Munger has stated that Google has the strong moat he has ever seen.
Loeb also purchased 5 million shares of networking gear maker Cisco Systems Inc. (NASDAQ:CSCO). On a purely qualitative basis the stock seems cheap at a PE in the single digits. Furthermore, all these tech companies could be a sign that Loeb likes the sector in general.
Loeb has explained in depth why he likes Yahoo! and Apple. Below is a brief summary from hedge fund letters which we obtained:
Loeb believes that Apple's future is dependent on growth in China but has the following valuation based on the US, excluding rapid growth in China, in his model: Net of cash, Apple Inc. (NASDAQ:AAPL)’s valuation is 11.1x 2012 EPS and only 9.6x 2013 estimates, which is cheap on a standalone basis and relative to the S&P500.
Loeb commented in regards to cash that 'Apple’s close to $100 billion of net cash is greater than that of Microsoft, Google, Facebook and Nokia combined.'
Loeb has valued Yahoo! at $17 a share based on the valuable assets the company holds, specifically Yahoo! Japan and Alibaba.
In his Q4 letterhe stated:
"Yahoo forms only a modest portion of the Company’s actual value (a mere $2.00 per share, trading at ~14.49 as of 03/12/12). The aftertax value of Yahoo’s Asian assets — Alibaba and Yahoo! Japan — currently constitutes $11 per share of its value (73%), with an additional $2 per share of net cash."
He goes on to explain further the case for the 'crown jewel' Alibaba. Now that Loeb has gotten on the board he likely sees potential to have that value unlocked by management.
We will be following the Yahoo story in particular, as drastic new changes seem to occur nearly everyday.
(Disclosure: The author of this article is long Cisco)