Dan Loeb, the activist hedge fund manager, closed last year with a +24% return after gaining +2.2% in December. The aggressive investor has several positions to thank for this performance. Dan Loeb’s return in his event driven strategies is better than many of his peers, but still failed to eclipse the +30% gain that was recorded by the S&P 500.
We would like to discuss both Dan Loeb’s hits and misses but there is barely any bad pick to count in the last year, at least not in his long book in the U.S.
Even Sony Corporation (NYSE:SNE) (TYO:6758), where Loeb’s demands were not accepted, gained nearly 50% in 2013. Third Point owns a 7.5% position in Sony, and the hedge fund pushed the company to spin off its ‘underperforming’ entertainment unit and focus on its core business in electronics. The Japanese company rejected the idea and said that the entertainment/film-production arm of Sony Corporation (NYSE:SNE) (TYO:6758) was an integral unit, but accepted that the company had to improve its margins. Dan Loeb graciously accepted Sony’s response and said that he will watch Sony Corporation (NYSE:SNE) (TYO:6758)’s progress and won’t interfere for some time. This tussle with Sony famously involved George Clooney as well, in case you need to be reminded about Clooney’s estimation of Loeb’s personality and tactics, you can read the story here and here.
Dan Loeb’s older holdings boost returns
Yahoo! Inc. (NASDAQ:YHOO), which remained Dan Loeb’s top holding, contributed a major chunk to his performance in 2013. At the end of 3Q2013, Third Point held 16 million shares of Yahoo, after it sold 46 million shares in that period. Dan Loeb resigned from this seat on Yahoo’s board and sold a major part of his position back to Yahoo at an estimated profit of $1 billion.
According to Business Insider, the deal was maneuvered by Yahoo! Inc. (NASDAQ:YHOO)’s CEO, Marissa Mayer, in an attempt to get rid of an activist on the board and gain full control of the company. Shares of Yahoo gained over 100% in the last year.
Third Point’s big return in the last year was also helped by +44% gain of American International Group Inc (NYSE:AIG),
Sothebys surrounded by activists
Third Point bought a position in the art collector Sothebys (NYSE:BID) in the first quarter of 2013 and leveled his activist guns at the company in August. It was not just Dan Loeb who was pestering Sotheby’s this year; the stock gathered a crowd of activist investors, much to its chagrin. Nelson Peltz’ Trian Partners and Mick McGuire’s Marcato Capital Management have also invested in Sothebys (NYSE:BID)’s. Last month, the company unanimously elected Domenico De Sole as the new CEO, under pressure from Dan Loeb, who criticized the previous CEO in one of his trademark letters. Over the course of 2013, shares of Sothebys (NYSE:BID)’s were up 65%. Loeb’s position in the art auctioneer amounts to 9.2% of the equity which is followed by McGuire, who has a 6.6% position.
Dan Loeb makes winning bets in Q3
At the Robin Hood Investors Conference, Dan Loeb disclosed that he was long Softbank Corp (TYO:9984). Third Point has invested $1 billion in the Chinese company which is set to benefit from Alibaba’s IPO, where Softbank holds a major stake.
When Loeb was reducing his weight in Yahoo! Inc. (NASDAQ:YHOO), he was buying Google Inc (NASDAQ:GOOG), apparently. Third Point bought 110k shares of the internet search giant in the third quarter. Shares of Google were up 27% over the later half of 2013.
Loeb bought a position in Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) in Q3, his quarterly letter revealed. The reason for Loeb’s timing was simple: Nokia’s sizable cash hoard that will come as it sells its handset business to Microsoft Corporation (NASDAQ:MSFT). The smart manager is looking at a fat dividend or a share buyback in the coming days and also thinks that Nokia’s patent portfolio is a treasure. Shares of Nokia have gained +!00% in the latter half of 2013.
Other picks of 3Q2013, Gilead Sciences, Inc. (NASDAQ:GILD) was up 40% in second half whereas Activision Blizzard, Inc. (NASDAQ:ATVI) gained 17% in the same period.
Third Point picked CF Industries Holdings, Inc. (NYSE:CF) in 2Q2013, and shares were up 13% on the year. The fund bought Anadarko Petroleum Corporation (NYSE:APC) in 1Q2013 which barely gained 5% in 2013. Most recently Loeb bought a position in Hertz Global Holdings, Inc. (NYSE:HTZ) which amounted to less than 5% of outstanding shares. There are reports circulating that Carl Icahn has bought a large position as well and the company adopted a poison pill to defend itself against the activist investor.