Third Point, a New York-based investment advisor, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. The Third Point Offshore Fund returned 1.2% net in the fourth quarter compared to a 7.5% return for the S&P 500 INDEX (TR) and a 9.9% return for the MSCI WORLD INDEX (TR). Defensive portfolio orientation, weakness in several large positions, and write-offs/ markdowns in crypto-related private investments impacted the fund’s performance in the quarter relative to indexes. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Third Point highlighted stocks like PG&E Corporation (NYSE:PCG) in the fourth quarter investor letter. Headquartered in San Francisco, California, PG&E Corporation (NYSE:PCG) engages in the sale and distribution of electricity and natural gas. On February 13, 2023, PG&E Corporation (NYSE:PCG) stock closed at $15.66 per share. One-month return of PG&E Corporation (NYSE:PCG) was -1.32%, and its shares gained 37.37% of their value over the last 52 weeks. PG&E Corporation (NYSE:PCG) has a market capitalization of $33.241 billion.
Third Point made the following comment about PG&E Corporation (NYSE:PCG) in its Q4 2022 investor letter:
“As we enter our fifth year as investors in PG&E Corporation (NYSE:PCG), first as bondholders and then as shareholders, we remain as enthusiastic as ever about the company’s potential. Even with a 63% increase in the share price over the past six months, we believe the Company remains significantly undervalued with a risk-reward skewed almost entirely to the upside. Patti Poppe is one of the most talented CEOs in America today and we expect her team will be able to consistently deliver on their 10% medium term earnings growth forecast. In addition to improved management execution, this trajectory is significantly de-risked by supportive legislative initiatives (a 10-year undergrounding plan and extension of Diablo Canyon) and improving regulatory certainty via positive cost of capital adjustments and the 2023 General Rate Case.
By 2024, earnings should grow to at least $1.34. Using a conservative 16x multiple on forward earnings (vs. 18x for the group) implies a $21.50 target price by the end of this year. Shareholders will also benefit from an expected reinstatement of a dividend in the middle of 2023. This should serve as a catalyst for increased institutional ownership, similar to the dynamics around the Company’s inclusion in the S&P 500 Index in September 2022. Finally, investors are becoming more comfortable with the reduction in the Fire Victims’ Trust ownership stake, which now accounts for only 9% of shares outstanding. The reduction from an original position of 24% occurred with limited market impact and we expect the remainder of the position will be exited by the end of this year, clearing that overhang.”
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PG&E Corporation (NYSE:PCG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held PG&E Corporation (NYSE:PCG) at the end of the third quarter, which was 51 in the previous quarter.
We discussed PG&E Corporation (NYSE:PCG) in another article and shared the list most undervalued utility stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
