Billionaire Dan Loeb’s Portfolio: Top 12 Stock Picks
In this article, we will take a look at billionaire Dan Loeb's portfolio: top 12 stock picks. To know more about the top stocks in Loeb's portfolio, go directly to Billionaire Dan Loeb's Portfolio: Top 5 Stock Picks.
Billionaire Dan Loeb is among the notable hedge fund managers who missed out on the tech rally of 2023. Third Point's hedge fund has lagged behind as the overall market turned bullish, driven by explosive moves of some of the biggest tech companies. Loeb, who oversees about $6.5 billion in his hedge fund, shunned tech stocks early in the year on concerns that they would be struck by the aggressive monetary policy tightening by the Federal Reserve.
However, that was not the case, as the market remained resilient amid the soaring interest rates. Tech heavy Nasdaq rallied by more than 40% as investors continued to shun the high-interest rates. As Loeb remained cautious, he missed out on big opportunities presented by NVIDIA Corporation (NASDAQ:NVDA) and Amazon.com, Inc. (NASDAQ:AMZN) that rallied at the back of the artificial intelligence boom.
Funds at Third Point were down by 1.6% for the year through August, underperforming the S&P 500, which was up by more than 17%. The torrid performance in the year's first quarter added to the 21.8% loss last year as the overall stock market remained under pressure amid soaring inflationary pressures.
One thing that has affirmed Loeb as one of the greatest portfolio managers is his ability to move past stumbles and bounce back. Third Point posted double-digit losses in the first quarter of 2020 as the Coronavirus rattled the markets. However, the hedge fund turned around its fortunes. It ended the year up by 19% thanks to tweaking the portfolio with an increased focus on consumer and commercial debt that benefited from a low-interest rate environment.
Dan Loeb of Third Point
Our Methodology
We looked at Loeb's SEC filings for the third quarter and selected his fund's top 12 stock picks.
Billionaire Dan Loeb's Portfolio: Top 12 Stock Picks
12. American International Group, Inc. (NYSE:AIG)
Third Point's Stake Value: $178.77 Million
Percent of Portfolio: 2.71%
Number of Hedge Fund Holders: 42
American International Group, Inc. (NYSE:AIG) is one of Dan Loeb's top stock picks in the financial services sector. It offers various types of insurance and financial services to businesses and individuals.
Third Point started buying stakes in the company in Q4 of 2022 and owned 2.95 million shares of American International Group, Inc. (NYSE:AIG) in the third quarter of 2023. The stakes were valued at $178.77 million. The stock is up by about 4% for the year and pays a 2.19% dividend yield.
11. Uber Technologies, Inc. (NYSE:UBER)
Third Point's Stake Value: $193.16 Million
Percent of Portfolio: 2.92%
Number of Hedge Fund Holders: 146
Uber Technologies, Inc. (NYSE:UBER) is a global developer and operator of proprietary technology applications. It is one of Dan Loeb's top stock picks in the technology sector, specializing in connecting consumers with various transportation modalities such as ride-sharing, car-sharing, and the discovery of restaurants.
Uber Technologies, Inc. (NYSE:UBER) is up by about 130% for the year, outperforming the S&P 500, which is up by about 17%.
This is what RiverPark Advisors said about Uber Technologies, Inc. (NYSE:UBER), in its letter to investors for the third quarter of 2023:
“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”
10. Ferguson plc (NYSE:FERG)
Third Point's Stake Value: $208.73 Million
Percent of Portfolio: 3.16%
Number of Hedge Fund Holders: 46
Ferguson plc (NYSE:FERG) is one of Third Point's investment players in the industrial sector, specializing in distributing plumbing and heating products. Customers in residential, commercial, and civil infrastructure get plumbing and heating solutions from the company.
Ferguson plc (NYSE:FERG) is up by about 33% for the year, backed by a 2.87% dividend yield, affirming its status as one of Dan Loeb's top stock picks. Third Point held stakes worth $208.73 million as of the end of Q3 2023, accounting for 3.16% of the portfolio.
This is what Right Tail Capital said about Ferguson plc (NYSE:FERG), in its letter to investors for the third quarter of 2023:
“Ferguson plc (NYSE:FERG) is a leading US-focused distributor ($33B mkt cap) of plumbing and HVAC supplies that is split between non-residential (48%) and residential (52%) as well as repair/remodel (60%) and new construction (40%). Like other high-quality distributors, Ferguson benefits from a prime spot in its value chain. It has many suppliers (over 30,000), customers (~1 million), and small competitors. By providing great service and parts availability, Ferguson guides its customers to the parts they want in a timely fashion.
I think last year the market was worried that Ferguson had over-earned due to rising prices and excess demand during covid. Furthermore, the company had removed its primary listing in the United Kingdom that caused some force selling among European index holders. Right Tail had the key insight that…” (Click here to read the full text)
9. Jacobs Solutions Inc. (NYSE:J)
Third Point's Stake Value: $245.70 Million
Percent of Portfolio: 3.72%
Number of Hedge Fund Holders: 40
Dallas, Texas-based Jacobs Solutions Inc. (NYSE:J) is an industrial company that provides consulting technical engineering, scientific, and project delivery services. The company also offers cyber, data analytics, systems and software application integration and consulting, enterprise-level and mission IT, and design.
While Jacobs Solutions Inc. (NYSE:J) is up by about 5.8% for the year, it comes with a 0.82% dividend yield. Third Point started buying stakes in Jacobs Solutions Inc. (NYSE:J) in the first quarter and has since increased its stakes to $245.7 million, accounting for 3.72% of the portfolio.
Here is what Madison Investments said about Jacobs Solutions Inc. (NYSE:J) in its third quarter 2023 investor letter:
“Jacobs Solutions Inc. (NYSE:J), a professional services firm, is benefitting from increased spending on large infrastructure, water, and energy transition projects. Jacobs Solutions is a professional services firm spanning consulting, engineering, and project delivery for both the public and private sector. We admire the company’s strong position across infrastructure, water, advanced manufacturing, and energy transition – all areas which we believe have a bright future. However, as the shares appreciated, we decided to sell to fund more attractive opportunities.”
8. Intercontinental Exchange, Inc. (NYSE:ICE)
Third Point's Stake Value: $262.94 Million
Percent of Portfolio: 3.98%
Number of Hedge Fund Holders: 54
Intercontinental Exchange, Inc. (NYSE:ICE) is a company that operates global exchanges and clearing houses. The company also provides data services, market infrastructure, and technology solutions for financial institutions, corporations, and government entities.
Intercontinental Exchange, Inc. (NYSE:ICE) remains one of Dan Loeb's top stock holdings in the financial services sector, going by the 10% gain year to date, supported by a 1.48% dividend yield. Third Point increased its stakes in Intercontinental Exchange, Inc. (NYSE:ICE) by 30% to $262.94 million in Q3 2023, accounting for 3.98% of the portfolio.
Oakmark Funds, an asset management firm, discussed Intercontinental Exchange, Inc. (NYSE:ICE), in its Q1 2023 investor letter. This is what the fund said:
“Intercontinental Exchange was founded in the year 2000 after Western Power Group executive Jeff Sprecher bought Continental Power Exchange from MidAmerican Energy for $1. Sprecher made the acquisition because he recognized that the deregulation of the electric power industry in the United States had opened a market for surplus energy to be traded between power plants. Using eBay as a model, Sprecher aimed to develop a transparent marketplace for over-the-counter energy trading. Acquisitions of International Petroleum Exchange, New York Board of Trade, Creditex, Climate Exchange, NYSE Euronext, Interactive Data Corporation, and Ellie Mae followed, with the commonalities of successful acquisition consisting of small companies early in their growth trajectory that could be scaled on ICE’s platform, and large mature companies where ICE’s technological and operating expertise could reinvigorate and scale their growth trajectory …” (Click here to read the full text)
7. DuPont de Nemours Inc. (NYSE:DD)
Third Point's Stake Value: $309.55 Million
Percent of Portfolio: 4.69%
Number of Hedge Fund Holders: 38
DuPont de Nemours, Inc. (NYSE:DD) provides technology-based materials and solutions. The company makes materials and solutions for making semiconductors and integrated circuits. It has electronics and industrial, water and protection, corporate and other segments.
DuPont de Nemours, Inc. (NYSE:DD) is up by about 6% for the year and remains one of Dan Loeb's top stock picks in the Basic Materials sector, as it also comes with a 2.01% dividend yield.
Third Point discussed DuPont de Nemours, Inc. (NYSE:DD) in its Q4 2022 investor letter. This is what the fund said:
“We recently increased our investment in DuPont de Nemours, Inc. (NYSE:DD), a specialty chemical company run by legendary value creator Ed Breen, who is leading a corporate transformation. In November, DuPont divested its most cyclical and lowest margin business segment, Mobility & Materials, to Celanese for $11 billion, or 14x 2023e EV/EBITDA. Following the divestiture, the improved DuPont trades at 11x 2023e EV/EBITDA, which represents a ~30% discount to its peer group.
We believe the company is laser-focused on closing this gap. First, $5 billion of the proceeds are being deployed to repurchase nearly 15% of its outstanding shares. The next significant catalyst for the stock is a potential settlement of PFAS-related multidistrict litigation in South Carolina, which remains an overhang on the stock even though DuPont’s PFAS liability was largely ring-fenced by the 2021 settlement with Chemours and Corteva. DuPont’s strong management team is eager to demonstrate the business quality of the new portfolio during the current period of economic volatility. We expect the combined catalysts of increased share repurchases, the pending resolution of legal claims, and the new business structure to drive meaningful value for shareholders.”
6. Meta Platforms, Inc. (NASDAQ:META)
Third Point's Stake Value: $330.23 Million
Percent of Portfolio: 5%
Number of Hedge Fund Holders: 234
Meta Platforms, Inc. (NASDAQ:META) remains one of Dan Loeb's top stock picks after a 177% share price gain year to date, benefiting from increased advertising spending and an artificial intelligence boom. Loeb opened a position worth $330.2 million in the company in Q3 2023, accounting for 5% of the portfolio.
Here is what Artisan Select Equity Fund said about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) added to its string of gains in Q3. The share price is up about 150% this year. Second quarter results were very good: revenue growth is back to double digits, user metrics are solid and show very good engagement, daily active users grew 7%, and importantly, Facebook app users continue to grow across all geographies. Instagram is growing more strongly, but solid growth in the legacy Facebook business is a positive indicator. Importantly, the company has controlled expenses tightly. Headcount was down 14% year over year. Adjusted EBIT grew 44%, and the margin recovered strongly to 38%, from 29% last year.”
Click to continue reading and see Billionaire Dan Loeb's Portfolio: Top 5 Stock Picks.
Suggested articles:
Disclosure: None. Billionaire Dan Loeb's Portfolio: Top 12 Stock Picks is originally published on Insider Monkey.
