Zach Schreiber founded PointState Capital in 2010 together with Sean Cullinan and five former Duquesne Capital portfolio managers. The fund started with $5.0 billion in AUM with Duquesne’s Stanely Druckenmiller having invested $1.0 billion. In 2012, Sean Cullinan, who served as Chairman and CEO, left the fund and was replaced by Zach Schreiber. Schreiber is scheduled to appear at the Ira Sohn Conference in New York on May 4, which is why we decided to take a closer look at some of PointState’s largest equity positions from its last 13F filing, in order to get a better idea about the investor. Alongside Schreiber, the conference is also expected to feature Stan Druckenmiller, Jeff Smith of Starboard Value, David Einhorn of Greenlight Capital, and Larry Robbins of Glenview Capital (see full list here).
Schreiber was in the spotlight last year when he made around $1.0 billion by shorting oil. In 2014, PointState earned around $2.0 billion with a significant amount of this coming from bets on oil. Also in 2014, Schreiber attended the Ira Sohn Conference, where he predicted the drop in oil, which was trading at around $100 and lost around half its value through the end of the year. ““If you’re long, I’m sorry for you […] With crude at $100 a barrel, you’re picking up 25 cents in front of an oncoming truck,” Schreiber said in his presentation (see more details here).
After such a great prediction, it will be interesting to see what Schreiber will say at his this year’s speech. Meanwhile, PointState last 13F filing showed that its largest long interest was in healthcare with around 36% of its $3.93 billion equity portfolio allocated to the sector. Its largest holding is represented by Israel-based generic drug manufacturer Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), in which PointState reported a $$596.64 million stake containing 9.09 million shares. The fund has held shares of Teva since the end of 2013, but during the fourth quarter it raised the position by more than 80%.
In July 2015, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) announced the acquisition of Allergan plc (NYSE:AGN)’s generic business for $40.5 billion in cash and stock and the deal is expected to turn Teva into the leading generic drug company in the world. Teva’s stock has lost 14% since the beginning of the year amid a decline of the healthcare sector and amid the company’s announcement in March that the acquisition of Allergan’s generic unit would be delayed due to negotiations with regulators. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has already received approval from the European Commission, but it has to get the approval of the US Federal Trade Commission and the deal could be completed by June. Overall, among the funds we track, the sentiment towards Teva increased during the fourth quarter with the number of funds bullish on the stock going up to 81 from 70, while the aggregate value of their holdings surged to $9.74 billion from $6.80 billion and represented 17% of the company at the end of 2015. Aside from PointState, billionaire Andreas Halvorsen’s Viking Global boosted its position in Teva by 182% to 25.04 million shares during the fourth quarter.
Even though Schreiber said it was shorting oil, it was long natural gas, particularly Cheniere Energy, Inc. (NYSEMKT:LNG). The energy sector amassed 14% of PointState’s equity portfolio at the end of 2015, and the stake in Cheniere, which contained 12.89 million shares worth $480.08 million, amassed 12% of the portfolio. PointState initiated a position in Cheniere during the fourth quarter of 2011 and has seen the stock surge by approximately 600%. Last year was marked by the involvement of activist Carl Icahn, who built a 13.8% stake in the company and pushed for the ousting of chairman and CEO Charif Souki. On the other hand, also last year, Jim Chanos said he was short Cheniere Energy, Inc. (NYSEMKT:LNG), because the company was investing in expanding its capacity in an environment marked by a decline in demand (Chanos is also scheduled to present at the Ira Sohn Conference). However, Cheniere Energy, Inc. (NYSEMKT:LNG) has recently launched the Sabine Pass terminal in Louisiana and has started exports of liquefied natural gas, which helped to offset the supply glut in the US. Investors are betting on gas prices to gain ground on the back of exports from Sabine Pass that are expected to increase demand.
On the third spot in PointState’s equity portfolio is Allergan plc (NYSE:AGN), in which the fund initiated a stake containing 1.04 million shares worth $326.09 million during the fourth quarter. The move coincided with Allergan and Pfizer Inc. (NYSE:PFE) announcing their $160 billion merger, which would have created the largest drug company in the world. However, earlier this month the companies terminated the deal due to new regulations from the US Department of Treasury on tax inversions, which made the deal less profitable. Even though the acquisition failed, Allergan plc (NYSE:AGN) remains a solid bet as a standalone company. Moreover, after it sells its generic drugs business to Teva, it can use the money to fund stock buybacks and acquire other companies to expand its portfolio of brands. Allergan plc (NYSE:AGN) was the most popular stock among the funds in our database at the end of 2015, with 159 investors reporting stakes equal to 18.10% of the company.
In McDonald’s Corporation (NYSE:MCD), PointState cut its stake by 30% to 1.38 million shares worth $162.89 million. The fast food giant is currently trying to reshape its business in Asia and last week, Reuters reported that the company plans to sell 2,800 restaurants in North Asia to private equity firms. Citing people familiar with the matter, Reuters said that the firms that might be involved in transactions include Bain Capital, MBK Partners, TPG Capital Management and China Resources. In this way, McDonald’s Corporation (NYSE:MCD)’s will franchise the restaurants and will receive a one-time payment and annual royalty fees. McDonald’s Corporation (NYSE:MCD)’s stock has gained 9% since the beginning of the year and currently sports a dividend yield of 2.76%. During the fourth quarter, the number of funds long the stock (among those we track) went up by nine to 84. Jonathon Jacobson’s Highfields Capital Management held the largest stake in the list, which contained 11.90 million shares at the beginning of 2016.
On the other hand, PointState boosted its stake in Time Warner Cable Inc (NYSE:TWC) nearly fivefold to 772,360 shares worth $143.34 million. Time Warner Cable Inc (NYSE:TWC) is currently in the process of being acquired by Charter Communications, Inc. (NASDAQ:CHTR) in a deal that was worth $55 billion at the time of the announcement last May. The merger is currently awaiting regulatory approval and if completed would create the largest US cable company, while also leading to annual synergies worth estimated $800 million. Among the funds tracked by Insider Monkey, 103 investors amassed nearly 29% of Time Warner Cable Inc (NYSE:TWC)’s outstanding stock heading into 2016.
Disclosure: none
