Billionaire Dan Loeb has made some interesting moves lately. The founder of the $11 billion hedge fund, Third Point, Loeb’s bets on Greek bonds and Yahoo! helped his flagship fund return 21% in 2012. Let’s see what some of his big moves were last quarter.
Loeb’s biggest selloff was his dumping of 710,000 shares of Apple Inc. (NASDAQ:AAPL), which had been 9.3% of Third Point’s portfolio during the third quarter. As has been well-documented, Apple Inc. (NASDAQ:AAPL)’s growth story might be fading. Revenue grew by 45% in 2012, but is expected to only grow by 14% in 2013.
Jefferies’ take on the stock is rather intriguing. They believe that iPhone sales will continue slowing, margins will keep compressing, and management’s enthusiasm is fading. I cannot disagree.
Apple Inc. (NASDAQ:AAPL)’s sales have performed well in the past, given its strong brand and loyal customer base. However, Samsung is becoming a formidable opponent as well, and Google Inc (NASDAQ:GOOG) continues to lead the mobile-phone operating system market with over 50% market share.
Another of Loeb’s selloffs was United Technologies Corporation (NYSE:UTX), which had been 2.4% of the fund’s third-quarter portfolio. The company designs, manufactures, and services products that incorporate advanced technologies. United has seen notable weakness due to Europe, and I don’t like the company’s overexposure to the construction and aerospace industries. Another headwind is the company’s dependence on the U.S. government’s defense budget. As well, the company should also see interim pressure related to its Goodrich acquisition and divestiture of several non-strategic assets.
Morgan Stanley is now Third Point’s seventh-largest holding. Morgan basically gets its revenues from two major sources, 40% derived from institutional securities, which includes capital raising and financial advisory, while 50% is derived from global wealth management that encompasses brokerage and investment advisory services.
M&A and investment banking performances remain weak for the company, but stable credit spreads and strong trading activities should buoy the company over the interim. With a 0.8% dividend yield, one of the lowest in the the industry, the bank could be upping its dividend in the near future.
Herbalife Ltd. (NYSE:HLF) was a new 3.1 million-share position and now makes up 1.85% of Third Point’s hedge fund. Herbalife Ltd. (NYSE:HLF)has been under pressure of late by billionaire Bill Ackman, who is openly short the supplement company. Meanwhile, Dan Loeb and Carl Icahn are on the long side.