10 Little-Known Stocks Billionaire Dan Loeb is Buying

Published on April 20, 2022 at 9:43 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 10 little known stocks billionaire Dan Loeb is buying. If you want to see more unknown stocks in his portfolio, click 5 Little-Known Stocks Billionaire Dan Loeb is Buying.

Dan Loeb is an American activist investor who founded the New York-based hedge fund, Third Point, in 1995. Third Point follows value-oriented and event driven investment strategies to manage its $14 billion portfolio.

Dan Loeb secured his Bachelor’s degree from Columbia University and started his career in 1984 with Warburg Pincus, a private equity firm in New York. During his financial career, Loeb has worked at Island Records, Lafer Equity Investors, Jefferies LLC, and Citigroup across various roles. He established his own hedge fund in 1995.

Dan Loeb’s Favorite Stock Picks

Dan Loeb’s Third Point gained 23% at the end of November 2021. Most of the gain was realized by his bullish call on Upstart Holdings, Inc. (NASDAQ:UPST), an AI-powered lending platform. Heading into 2022, in line with his value investing mantra, Loeb favors “old tech” stocks like Amazon.com, Inc. (NASDAQ:AMZN), which is trading at a 30% to 40% discount from its fair value. He believes that Amazon presents a trillion dollar untapped revenue opportunity, and its Q4 results only prove that the company is working to improve in several areas, which will lead to an increase in its stock price. Amazon has robust long-term growth drivers and value proposition, according to Dan Loeb.

More of the billionaire’s favorites in the tech space are Intel Corporation (NASDAQ:INTC) and Accenture plc (NYSE:ACN). He has called Accenture “the gold standard in IT services” and added the stock to his Q4 portfolio by acquiring 1.25 million shares worth over $518 million. Despite underperformance and share weakness in the last year, Dan Loeb remains confident in Intel Corporation (NASDAQ:INTC), noting that it has a “compelling, underappreciated fundamental story”. With the company’s new investment plan, Loeb believes that Intel is on the rebound. Intel also plans to retain skilled talent and present an improved product pipeline.

Dan Loeb’s Activist Campaigns

Dan Loeb’s most recent activist campaign that made headlines was against Shell plc (NYSE:SHEL). According to Reuters on October 27, Dan Loeb built a $750 million stake in Shell plc (NYSE:SHEL) and pushed the London-based oil giant to split into smaller independent companies for achieving better performance and operational efficacy. Although Third Point did not specify how many units must Shell plc break down into, the main premise was to separate its liquefied natural gas, renewables, and trading businesses from the core energy division. This would drive up shareholder value, cut costs, and promote decarbonization. Dan Loeb’s motivation was to ultimately return greater value to Shell stakeholders, who have just received gains of 3% on an annual basis for the last 20 years.

Apart from Shell plc (NYSE:SHEL), Dan Loeb’s Third Point has successfully initiated activist campaigns at Nestle, Intuit, Sotheby’s, Sony, Toshiba, and Fanuc, among others.

Activist investors like Dan Loeb are also known to target SPACs, since companies that go public via SPACs almost inevitably lose shareholder value. For example, last month, Dan Loeb’s Third Point purchased a 6.4% stake in Cano Health, Inc. (NYSE:CANO), a primary care and medical services company, that went public via a merger with JAWS Hurricane Acquisition Corporation (NASDAQ:HCNE). He is convincing Cano Health to put itself up for sale, since investors view SPACs quite unfavorably now. Market experts forecast many more activists will target SPAC mergers in the future, primarily due to their declining performance post-IPO.

Some of the most notable stocks in Dan Loeb’s Third Point portfolio include Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). However, in this article, we focus on the little-known securities acquired by the billionaire in the fourth quarter of 2021.

Our Methodology

We used the Q4 portfolio of billionaire Dan Loeb’s Third Point to select the hedge fund’s stock picks that are not much famous.

Little Known Stocks Billionaire Dan Loeb is Buying

10. Ventyx Biosciences, Inc. (NASDAQ:VTYX)

Number of Hedge Fund Holders: 12

Ventyx Biosciences, Inc. (NASDAQ:VTYX) was incorporated in 2018 and is based in Encinitas, California. It operates as a clinical-stage biopharmaceutical company, developing small molecule drug candidates for inflammatory diseases and autoimmune disorders. Among the hedge funds tracked by Insider Monkey in Q4 2021, 12 funds reported owning stakes in Ventyx Biosciences, Inc. (NASDAQ:VTYX), worth approximately $337 million.

Securities filings for Q4 2021 reveal that Dan Loeb’s Third Point added Ventyx Biosciences, Inc. (NASDAQ:VTYX) to its portfolio by purchasing 4.3 million shares of the company, worth $83 million, representing 0.57% of the total 13F holdings.

On March 23, Ventyx Biosciences, Inc. (NASDAQ:VTYX) reported a FY GAAP loss per share of $6.65, ahead of analysts’ expectations by $0.87. The company’s cash equivalents and marketable securities stood at $286.7 million as of December 31, 2021.

Canaccord analyst Edward Nash on March 31 initiated coverage of Ventyx Biosciences, Inc. (NASDAQ:VTYX) with a Buy recommendation and a $30 price target. The analyst stated that out of the company’s three programs in clinical development, his model incorporates only VTX002, projecting a 2027 launch in the United States.

In addition to holding significant stakes in Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), billionaire Dan Loeb started building a position in Ventyx Biosciences, Inc. (NASDAQ:VTYX) during the fourth quarter of 2021.

9. Perimeter Solutions, SA (NYSE:PRM)

Number of Hedge Fund Holders: 23

Perimeter Solutions, SA (NYSE:PRM) is a Missouri-based company that manufactures and sells firefighting products and lubricant additives in the United States, Germany, and international markets.

Dan Loeb acquired 6.45 million shares of Perimeter Solutions, SA (NYSE:PRM) in the fourth quarter of 2021, worth $89.5 million, representing 0.62% of the total 13F portfolio. According to Insider Monkey’s fourth quarter database, 23 hedge funds were bullish on Perimeter Solutions, SA (NYSE:PRM), with collective stakes valued at $1.4 billion.

On April 14, UBS analyst Joshua Spector initiated coverage of Perimeter Solutions, SA (NYSE:PRM) with a Buy rating and a $15 price target. The analyst noted that Perimeter Solutions, SA (NYSE:PRM)’s leads the market in fire safety materials and this could lead to a 15% EBITDA CAGR through 2025, which would be the high end versus specialty chemical competitors. The analyst added that the company’s cash conversion and returns are also “best in class”. Spector told investors that at 12-times his expected 2023 EBITDA, Perimeter Solutions, SA (NYSE:PRM) presents a “compelling opportunity at a reasonable value”.

8. Aurora Innovation, Inc. (NASDAQ:AUR)

Number of Hedge Fund Holders: 24

Aurora Innovation, Inc. (NASDAQ:AUR) was founded in 2017 and is headquartered in Pittsburgh, Pennsylvania. Aurora Innovation, Inc. (NASDAQ:AUR) operates as a self-driving technology company. Dan Loeb of Third Point purchased more than 1 million shares of Aurora Innovation, Inc. (NASDAQ:AUR) in Q4 2021, valued at $6.5 million. The stock represents 0.04% of the total 13F portfolio.

On April 6, Aurora Innovation, Inc. (NASDAQ:AUR) partnered with Werner Enterprises, Inc. (NASDAQ:WERN), a transportation and logistics provider, to test and deliver autonomous trucks for one of the most commercially active and critical highways in the country. Autonomous trucks powered with Aurora Innovation, Inc. (NASDAQ:AUR)’s Aurora Driver platform are carrying freight between Fort Worth and El Paso on behalf of Werner.

According to the database of elite hedge funds monitored by Insider Monkey, 24 funds held long positions in Aurora Innovation, Inc. (NASDAQ:AUR) at the end of December 2021, with total stakes collectively amounting to $116.5 million.

7. Grab Holdings Limited (NASDAQ:GRAB)

Number of Hedge Fund Holders: 35

Grab Holdings Limited (NASDAQ:GRAB) is a Singapore-based company that runs a transportation and fintech platform in Southeast Asia. The company provides mobility and grocery delivery services, as well as digital payments via its platform.

Dan Loeb’s Third Point added Grab Holdings Limited (NASDAQ:GRAB) to its Q4 portfolio by buying 12.40 million shares of the company, worth $88.4 million, representing 0.61% of the total securities.

On April 19, Bernstein analyst Venugopal Garre initiated coverage of Grab Holdings Limited (NASDAQ:GRAB) with a Market Perform rating. The analyst likes the long-term prospects for the “super app” and believes there is a controlled downside to the platform. However, he is waiting on the flow from the lock-up expiry and the bottoming of earnings before taking a constructive stance on the shares.

6. Apollo Global Management, Inc. (NYSE:APO)

Number of Hedge Fund Holders: 50

Apollo Global Management, Inc. (NYSE:APO) is a New York-based private equity firm with offices in North America, Asia, and Europe. The company invests in credit, private equity, and real estate markets. It manages portfolios for endowment and sovereign wealth funds, as well as institutional and individual investors. On April 13, Oppenheimer analyst Chris Kotowski upgraded Apollo Global Management, Inc. (NYSE:APO) to Outperform from Perform with a $64 price target.

Securities filings for Q4 2021 reveal that Dan Loeb’s Third Point purchased 200,000 shares of Apollo Global Management, Inc. (NYSE:APO), worth $14.4 million, representing 0.10% of the total 13F holdings.

In 2021, Apollo Global Management, Inc. (NYSE:APO)’s full-year revenue stood at $3.56 billion, an increase of almost 1275% from the $258.9 million revenue in 2020. Net income in 2021 came in at $1.8 billion, compared to $156.6 million in the prior year.

According to Insider Monkey’s fourth quarter database, 50 hedge funds held long positions in Apollo Global Management, Inc. (NYSE:APO), compared to 47 funds in the earlier quarter. The total stakes owned by elite funds in Q4 2021 amounted to $2.1 billion.

Elite hedge funds have Apollo Global Management, Inc. (NYSE:APO) on their radar, just like Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).

Here is what Miller Value Partners Income Strategy has to say about Apollo Global Management, Inc. (NYSE:APO) in its Q4 2021 investor letter:

“Apollo Global Management (APO) rose 18.4% during the quarter. The company reported Q3 distributable earnings (DE) of $1.71, well ahead of consensus of $1.10 and the quarterly dividend of $0.50/share (2.8% annualized yield). Fee-related earnings of $300M beat by 7% while realized net performance fees of $312M topped estimates by 23%. Total assets under management (AUM) of $481.1Bn and fee-earning AUM of $361.3Bn both rose +2% sequentially on the back of robust capital raising with $18.1Bn of inflows over the period. Additionally, Apollo hosted their 2021 Investor Day, outlining long-term financial targets including over $9/share in distributable earnings by 2026 (14% Compound Annual Growth Rate (CAGR) from $5.50 pro-forma 2022E) and fee-related earnings of $4.50-$4.75 (18% CAGR). Management expects to roughly double AUM by 2026 to $1trn from $481Bn currently with a 2.25x increase in fee-related revenues to $4.6Bn.”

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