Billionaire Daniel Loeb founded his New York-based hedge fund Third Point Management in 1995 with just over $3 million. Since its inception, the fund has returned roughly 25% annually. Loeb graduated from Columbia University in 1983 and worked at Jefferies & Company and Citibank before starting Third Point. Loeb is considered an activist investor that takes outsized positions to “strong arm” companies into making changes, so to speak. We believe that Loeb has invested in five companies that are going through a corporate event, fitting his strategy, but these companies also pay solid dividends that help income-seeking investors weather the interim (check out Dan Loeb’s newest picks).
United Technologies Corporation (NYSE:UTX) pays a 2.7% dividend yield and acquired Goodrich Corp. earlier this year. Including Goodrich’s contribution to sales, United Technologies’ revenue is expected to be up 3% this year, and 10% in 2013 following a full year of the Goodrich integration.
United Technologies has managed to continue growing EPS with margin expansion, where 2011 earnings were 12% higher than its previous EPS peak in 2008, despite revenues that were 4% lower than this period. Compared to other diversified tech product peers, United Technologies trades on the low end. Shares sport a trailing P/E of 14x, which stack up favorably to Honeywell’s 21x and GE’s 16x multiples. Joining Loeb in United Technologies investor was fellow billionaire Ken Fisher, founder of Fisher Asset Management (see Ken Fisher's favorite stock picks).
Newell Rubbermaid Inc. (NYSE:NWL) is Loeb’s 24th largest holding, and the fund manager increased his stake in the company by 100% last quarter. Newell pays a 2.7% dividend yield and operates in a relatively niche market, making food storage containers. Newell trades with a beta of 1.7 and is up 35% year to date compared to the S&P 500’s 13% return.
Newell is looking for continued growth, with a new long-term plan that includes restructuring operations to focus on emerging markets outside of the U.S., which accounts for a whopping two-thirds of revenues. Latin America and Southeast Asia are two areas in particular that will be important to the company. This restructuring is expected to save Newell upwards of $325 million by 2015. Billionaire investor and founder of Citadel Investment Group – Ken Griffin – was the top fund owner in Newell last quarter (check out Ken Griffin’s latest picks).