In this article, we will discuss the 9 stocks billionaire Dan Loeb is adding to his portfolio. If you want to skip reading about Dan Loeb’s investment philosophy and his hedge fund’s performance, you can go directly to Billionaire Dan Loeb is Adding These 5 Stocks in his Portfolio.
Daniel Seth Loeb is an American investor, philanthropist, and the founder and CEO of the New York-based hedge fund, Third Point. He is the son of Ronald Loeb, who was a lawyer and general counsel at Williams-Sonoma, Inc. (NYSE:WSM).
Loeb’s Investment Philosophy
According to Loeb, he became fascinated with investing at the age of 5 or 6. Loeb’s main inspiration was his aunt Ruth Handler, the creator of the Barbie Doll. Loeb said:
“I associated success in business with Hot Wheels and Barbie dolls. I think it was a very powerful enforcer early on to like business.”
Dan Loeb had already made around $120,000 in profits from investments during his time at Columbia University, which he later lost in a bad investment. According to Loeb, this bad investment taught him about the complication of “over concentrating positions.” According to the New York Magazine, Loeb’s key to success is that he believes in buying troubled companies and replacing their incompetent management to get the company back on its feet and return it to profitability.
Daniel Loeb has been known to write angry letters to companies where he believes that the executives are greedy and affecting the shareholder returns. One of these letters was the reason Yahoo’s CEO, Scott Thompson, had to step down from his position. At that time, Loeb’s Third Point had a 5.8% stake in the company.
Third Point LLC
Third Point LLC was founded by Daniel Loeb in 1995 with $3.3 million he collected from his family and friends. As of the first quarter of 2022, the annual return of Third Point since its inception stood at 14.3%. According to the Q1 filings, the fund manages approximately $16 billion in assets for sovereign wealth funds, endowments, foundations, corporate & public pensions, high net-worth individuals, and employees.
Third Point focuses its investments on private equities, fixed income, and American depositary receipt markets. The firm has 6 additional offices apart from its headquarters in New York, including offices in Hong Kong, India, and London. It is also the investment manager of Third Point Partners Qualified L.P., Third Point Partners L.P., Third Point Offshore Master Fund L.P., and Third Point Ultra Master Fund L.P.
According to Q1 13F filings, Third Point had $7.68 billion in managed 13F securities. The fund made 9 new purchases in the quarter and sold out 26 stocks. Furthermore, the firm reduced its holdings in 22 stocks while making additional purchases in 5.
SentinelOne, Inc. (NYSE:S), PG&E Corporation (NYSE:PCG), and Danaher Corporation (NYSE:DHR) are some of the most notable names in Third Point’s portfolio. In this article, we will discuss the fund’s new purchases.
Dan Loeb of Third Point
Our Methodology
These stocks were picked from the first quarter 2022 13F portfolio of Third Point LLC. All the stocks in the list were added to the fund’s portfolio in the first quarter of 2022.
The hedge fund sentiment around each stock was taken from Insider Monkey’s Q1 database of 900+ elite hedge funds.
Billionaire Dan Loeb is Adding These Stocks in his Portfolio
9. Adagio Therapeutics, Inc. (NASDAQ:ADGI)
Third Point’s Stake Value: $4.5 million
Percentage of Third Point’s 13F Portfolio: 0.05%
Number of Hedge Fund Holders: 9
Adagio Therapeutics, Inc. (NASDAQ:ADGI) is a US-based clinical-stage biopharmaceutical company. The company’s primary focus is on developing and commercializing antibody-based solutions for infectious diseases. The company was added to Third Point’s portfolio in the first quarter of 2022 with 987,114 shares worth $4.5 million, representing 0.05% of the fund’s portfolio.
As of July 19, Adagio Therapeutics, Inc. (NASDAQ:ADGI) stock has surged 32.43% during the past 30 days. The company’s last reported cash and cash equivalents were around $532.2 million. The assets were valued at $556.3 million while the liabilities were around $96.9 million.
As of the first quarter of 2022, 9 hedge funds had a stake worth $64.6 million in Adagio Therapeutics, Inc. (NASDAQ:ADGI). OrbiMed Advisors was the most significant stakeholder in the company with shares valued at $23.055 million.
On May 13, Stifel analyst Stephen Willey told the investors that his confidence in Adagio Therapeutics, Inc. (NASDAQ:ADGI)’s FY2022 estimates and visibility into the company’s ADG20’s path forward remains “significantly limited”. The analyst lowered the firm’s price target from $9 to $5 and maintained a Hold rating on its shares.
SentinelOne, Inc. (NYSE:S), PG&E Corporation (NYSE:PCG), and Danaher Corporation (NYSE:DHR) are some of the significant names along with Adagio Therapeutics, Inc. (NASDAQ:ADGI) in Dan Loeb’s portfolio.
8. Western Digital Corporation (NASDAQ:WDC)
Third Point’s Stake Value: $7.27 million
Percentage of Third Point’s 13F Portfolio: 0.09%
Number of Hedge Fund Holders: 45
Western Digital Corporation (NASDAQ:WDC) is primarily a computer hard disk drive manufacturer. Moreover, it also produces and sells SSDs, flash memory devices, data center systems, and cloud storage services. According to Third Point’s 13F filings, the fund owned 72,450 shares of Western Digital Corporation (NASDAQ:WDC) worth $7.27 million at the end of Q1 2022.
On July 15, Deutsche Bank analyst Sidney Ho maintained a Buy rating on Western Digital Corporation (NASDAQ:WDC). However, the analyst lowered the firm’s price target to $64 from $72. According to Ho, the weaker flash demand and prices have been the main reason behind the price target revision.
At the end of Q1 2022, Lyrical Asset Management was the most significant shareholder in Western Digital Corporation (NASDAQ:WDC), with a stake value of $204.09 million. In addition, several hedge funds increased their holdings in the company in the same quarter. Citadel Investment Group increased its activity in the company by 2351%, followed by GLG Partners with an increase of 1468%, and Renaissance Technologies by 446%.
7. Cenovus Energy Inc. (NYSE:CVE)
Third Point’s Stake Value: $33.36 million
Percentage of Third Point’s 13F Portfolio: 0.43%
Number of Hedge Fund Holders: 44
Cenovus Energy Inc. (NYSE:CVE) is Canada’s third-largest crude oil and natural gas producer and the second-largest refiner and upgrader. In January 2021, the company acquired Husky Energy, a Canadian hydrocarbon exploration firm, for C$3.9 billion in stock. On June 18, National Bank analyst Travis Wood lowered his price target on Cenovus Energy Inc. (NYSE:CVE) to $38 from $41 and reiterated an Outperform rating on its shares.
As of June 30, the LTM revenues of Cenovus Energy Inc. (NYSE:CVE) were reported at $42.6 billion, representing a 269.2% growth from 2019 levels. Moreover, gross margins of 23.6% represented a 1.8 percentage point increase from 2019 levels. During the same period, the company’s net income was reported at $1.59 billion, and free cash flows stood at $3.43 billion.
Cenovus Energy Inc. (NYSE:CVE) has a dividend yield of 2.04%. In March 2020, the quarterly dividend payout of the company was $0.047. However, the next dividend was paid out in September 2020 at a meager sum of $0.014. Nonetheless, the most recent quarterly dividend of $0.083 was paid out on June 30 to the shareholders of record on June 14.
Here is what L1 Capital said about Cenovus Energy Inc. (NYSE:CVE) in its fourth-quarter 2021 investor letter:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Cenovus Energy, (due to) recovering oil price leading to improved investor sentiment, consensus earnings upgrades and strong free cash flow generation.”
6. Ingersoll Rand Inc. (NYSE:IR)
Third Point’s Stake Value: $76.78 million
Percentage of Third Point’s 13F Portfolio: 0.99%
Number of Hedge Fund Holders: 31
Ingersoll Rand Inc. (NYSE:IR) provides flow creation products such as compressors, vacuum, and blower solutions, in addition to other industrial products. The company sells its products in 160 countries under more than 40 brands. Insider Monkey’s database reveals that 31 hedge funds were bullish on Ingersoll Rand Inc. (NYSE:IR) with a total value of $815.2 million.
At the end of the first quarter of 2022, Ingersoll Rand Inc. (NYSE:IR)’s liquidity position was valued at $3.1 billion. It included $2 billion in cash along with a revolving credit facility of $1.1 billion. Furthermore, the company’s sales increased by 18% YoY and adjusted EBITDA represented a surge of 24% YoY. As of June 30, Ingersoll Rand Inc. (NYSE:IR)’s free cash flow was recorded at $471.5 million.
In the first quarter of 2022, Ingersoll Rand Inc. (NYSE:IR) paid out $8.2 million in dividends and made $101.1 million of repurchases. Currently, the company’s dividend yield stands at 0.2% with an annual payout of $0.08.
On July 15, Jefferies analyst Stephen Volkmann lowered Ingersoll Rand Inc. (NYSE:IR)’s price target from $60 to $55 and maintained a Buy rating on its shares. The analyst lowered his price target as he believes that companies are looking for earning cuts in the upcoming couple of years. However, he expects most of the machinery companies to be in line with or exceed the analyst estimates.
Ingersoll Rand Inc. (NYSE:IR) is a noteworthy name in Dan Loeb’s portfolio along with SentinelOne, Inc. (NYSE:S), PG&E Corporation (NYSE:PCG), and Danaher Corporation (NYSE:DHR).
Artisan Partners mentioned Ingersoll Rand Inc. (NYSE:IR) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“Ingersoll Rand is a global market leader with a broad range of mission critical flow creation technologies (pumps, compressors, etc.) for industrial and medical applications. The company’s recent Q3 results were solid and support our belief it is making the right investments in R&D and acquisitions to elevate its sustainable revenue growth rate. We have been particularly encouraged by the important role IR’s products can play in reducing the greenhouse gas intensity of manufacturing facilities. With an increasingly visible organic and acquisition-driven growth capability and further margin upside from the Gardner Denver merger, we added to our position as the market appears to be underappreciating the transformation underway at the company.”
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Disclosure: None. Billionaire Dan Loeb is Adding These 9 Stocks in his Portfolio is originally published on Insider Monkey.
