Billionaire Dan Loeb Grows Bearish on the Market As Short Positions Outpace His Conviction Buys

Considering that Dan Loeb recently stressed that he remained bullish on his “high conviction ideas”, it will be worthwhile to take a look at his top stock picks at the end of the September quarter. Third Point’s largest equity holding at the end of the third quarter was represented by Baxter International Inc. (NYSE:BAX).  The activist hedge fund upped its position in the healthcare company by a whopping 49 million shares during the latest quarter, ending the three-month period with 53.85 million shares. The freshly-updated position accounts for 16.69% of the fund’s portfolio as of September 30. At the end of September, Baxter International Inc. (NYSE:BAX) sealed an agreement with Loeb’s hedge fund, under which Third Point partner Munib Islam was added to the company’s Board of Directors. At the same time, the new addition to the Board will also represent the Board’s executive search committee, formed after CEO Robert Parkinson announced his departure. It is worth pointing our that the shares of Baxter have advanced by 14% since the beginning of the fourth quarter. Richard S. Pzena‘s Pzena Investment Management reported owning 4.86 million shares of Baxter International Inc. (NYSE:BAX) through the current round of 13F filings.

Amgen Inc. (NASDAQ:AMGN) is the second-largest equity holding of Third Point as of the end of the third quarter. The activist hedge fund firm increased its position in the biotechnology company by 850,000 shares during the recent quarter, owning 9.85 million shares valued at $1.36 billion as of September 30. The shares of the company have lost a mere 4% in 2015 despite being caught in both the broad August sell-off and the ‘biotech’ sell-off that occurred at the end of September. Healthcare-focused fund Sivik Global Healthcare, founded by Krishen Sud, reported owning 40,000 shares of Amgen Inc. (NASDAQ:AMGN) as of September 30.

Third Point owned 3.67 million shares in Allergan PLC (NYSE:AGN) at the end of the September quarter, which denoted a lift of 369,000 shares quarter-over-quarter. The shares of the pharmaceutical giant have gained almost 16% since the beginning of the year, thanks to their strong performance during the fourth quarter. Earlier this month, Allergan PLC (NYSE:AGN) reported its third quarter financial results, posting net revenue of $4.1 billion, which was an increase of 90% year-over-year. Meanwhile, its non-GAAP diluted earnings per share grew by 65% year-over-year to $3.48. First Eagle Investment Management reported owning 1.67 million Allergan PLC (NYSE:AGN) shares through its 13F filing for the September quarter.

Dow Chemical Co (NYSE:DOW) was the fourth-largest equity position of Dan Loeb’s firm at the end of the September quarter. His investment firm owns 23.5 million shares of the company as of September 30, which marks an increase of 500,000 shares quarter-over-quarter. The shares of Dow Chemical Co (NYSE:DOW) are up by 12% for the year, and are trading at a very attractive trailing P/E ratio of 13.97. This compares with a ratio of 22.70 for the S&P 500 Index. At the same time, the company pays out an annualized dividend of $1.68, which offers a current dividend yield of 3.29%. Phill Gross and Robert Atchinson‘s Adage Capital Management holds a 2.00 million-share position in Dow Chemical Co (NYSE:DOW) as of September 30.

Disclosure: None