Last week, Daniel Leob’s New York Based Hedge Fund Third Point LLC reported its trades and movements for the December quarter.
Since the last time we reported on the fund, Third Point’s current positions have fallen from 61 in September to 44 positions at the close of 2022.
The hedge fund’s reported valuation grew from $5.53 billion to $5.97 billion during the quarter but remains well below the valuation at the close of 2021 worth $14.33 billion.
The top 5 positions in the fund currently by size are: PG&E Corporation (16.09%), Â Colgate-Palmolive (15.25%), Danaher Corporation (12.00%), Bath & Body Works, Inc. (9.71%), Â UnitedHealth Group Inc (5.95%).
Third Point’s top portfolio increases during the quarter:
The fund initiated a position in financial services and insurance company American International Group Inc (US:AIG) with a 5.40% stake worth $322.52 million at the end of the quarter. The stock has recovered all weakness incurred over 2022 with shares trading flat on a 1 year view.
AIG reported fourth quarter results in mid-February with EPS slightly ahead of market expectations. The stock trades on a 3.61x PE ratio and pays a 2.10% dividend yield.
The fund increased its stake in Bath & Body Works, Inc. (US:BBWI) with a 4.92% portfolio allocation increase to 9.71% of the fund worth $579.42 million at the end of 2022. BBWI’s share price has rallied over 30% since the beginning of the December quarter.
Third Point has raised questions about BBWI’s governance practices in recent 13D filings and pushed for a Board member shakeup in December.
The third most significant trade was a new position in Microsoft Corporation with a 4.74% allocation worth $283 million at the end of the quarter. MSFT shares are down 10% on a 1 year view and continue to trade on a 30x PE ratio, above the market average.
The tech giant continues to grow sales and recently beat market expectations during the last result. Profitability and cash flows have fallen on a trailing 1 year basis for the first time in years although by a small amount.
The fourth most significant trade was in International Flavors & Fragrances Inc (US:IFF) with a new 4.04% weight position worth $241.13 million at the close of the quarter. IFF’s share price is trading around -28% lower over the last year and gave up -18% of gains in early February after reporting fourth quarter results.
The market was displeased with the 2023 guidance by management that was below the market’s sales and profit forecasts. IFF expects to generate around $12.5 billion in sales this year with around $2.35 billion of positive adjusted EBITDA.
Third Point also initiated a new position in Fidelity National Information Services Inc (US:FIS) with a 2.27% portfolio weight worth $135.70 million at the end of 2022. The financial services company’s share price has slid -27% over the last year and is trading more than -50% below pandemic highs.
During Fidelity’s most recent fourth quarter result release, management provided full year revenue and EPS guidance to the market of $14.20 to $14.45 billion and $5.70 to $6.00 per share. Both figures were below analyst forecasts. Shares dived a further -12.5% on the result. On the flip side, the stock pays an attractive 3.0% dividend yield at current prices.
Other portfolio increases included a 1.77% portfolio increase in PG&E Corporation (US:PCG) to a 16.10% weight, a 1.57% portfolio increase in TJX Companies Inc (US:TJX) to a 3.53% weight, a 1.29% portfolio increase to Dow Chemical Co (US:DOW) to a 3.45% weight and a new 0.76% weight to Laboratory Corp. of America Holdings (US:LH).
Third Point’s top decreases during the quarter:
Third Point cut its portfolio allocation in SentinelOne, Inc (US:S) by 5.18% to a 3.59% weight worth $214.47 million at the end of 2022. Since listing in 2021, the cybersecurity’s stock has rallied above $75 per share but is currently trading around $16 per share as valuations for growth companies plummeted over the last year.
The fund cut its stake in VENTYX BIOSCIENCES INC by -2.17% to a 0.55% weight worth $32.79 million at the end of the year.
Third point’s stake in Walt Disney Co (US:DIS) was reduced by 1.0% to a 1.38% allocation worth $82.54 million at the close of 2022. Disney’s share price has struggled since coming out of the pandemic with shares -40% from all time highs.
Third Point also completely exited positions in Twitter Inc (US:TWTR) due to the Musk takeover, EQT Corporation (US:EQT), Range Resources Corp. (US:RRC), T-Mobile US Inc (US:TMUS), Cano Health, Inc (US:CANO) and CSX Corporation (US:CSX).
During February, Third Point also sold out of Medicus Sciences Acquisition Corp (US:MSAC) and Membership Collective Group Inc (US:MCG).
This article originally appeared on Fintel
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