In this article, we discuss 10 favorite stocks of Dan Loeb’s Third Point. If you want to see the billionaire’s top 5 portfolio holdings, check out 5 Favorite Stocks of Dan Loeb’s Third Point.
Dan Loeb is a billionaire American investor and hedge fund manager who founded Third Point in 1995. Third Point is a New York-based activist hedge fund that focuses its investments on value-oriented companies which are often troubled. The hedge fund specializes in shuffling around ineffective management and corporate practices to turn profits for shareholders.
In 2022, Dan Loeb is leaning towards “old tech” stocks like Amazon.com, Inc. (NASDAQ:AMZN), stating that they are now as good as value stocks after the broad technology selloff. He believes companies like Intel Corporation (NASDAQ:INTC) deserve reconsideration by investors, and merger arbitrage could be beneficial for the company and its shareholders. He expects these tech names to outperform in 2022.
Third Point’s signature Offshore Fund declined by 5.3% in Q4 2021, and its Ultra Fund dipped 7.1%. For 2021, Offshore Fund’s full-year gains were 22.7%, and Ultra Fund returned 26.9%. Since inception, both flagship funds have returned annualized gains well above market benchmarks such as the Credit Suisse Event-Driven Index, S&P 500 Index, and the MSCI World Index.
In the fourth quarter of 2021, Dan Loeb’s $14.3 billion portfolio concentrated its investments in the utilities and telecommunications, information technology, healthcare, finance, consumer discretionary, and communications sectors. The hedge fund holds 92 securities, with the top 10 holdings comprising 52.41% of the total 13F portfolio.
Some of the most notable stocks in Dan Loeb’s Third Point portfolio include Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Rivian Automotive, Inc. (NASDAQ:RIVN), among others discussed in detail ahead.
Our Methodology
For this analysis, we used the 13F portfolio of Dan Loeb’s Third Point, selecting the top 10 stock picks of the billionaire for the fourth quarter of 2021.
Favorite Stocks of Dan Loeb’s Third Point
10. S&P Global Inc. (NYSE:SPGI)
Third Point’s Stake Value: $471,930,000
Percentage of Third Point’s 13F Portfolio: 3.29%
Number of Hedge Fund Holders: 79
S&P Global Inc. (NYSE:SPGI) is a New York-based company that deals in credit ratings, benchmarks, and data analytics, serving the global capital and commodity markets. Dan Loeb’s Third Point owns 1 million shares of S&P Global Inc. (NYSE:SPGI) as of Q4 2021, worth approximately $472 million, representing 3.29% of the hedge fund’s total 13F portfolio.
In 2021, S&P Global Inc. (NYSE:SPGI)’s revenue for the year stood at $8.2 billion, compared to $7.4 billion in the prior year. The net income in 2021 exceeded $3 billion, reflecting a 29.2% growth from 2020. The total cash and cash equivalents in 2021 also increased from $4.1 billion in 2020 to $6.5 billion.
On March 21, S&P Global Inc. (NYSE:SPGI) announced that it will redeem on April 20 5.000% Senior Notes due 2022, 4.750% Senior Notes due 2025 and 4.000% Senior Notes due 2025, with an aggregate principal amount of almost $1.6 billion.
Raymond James analyst Patrick O’Shaughnessy on April 7 maintained an Outperform rating on S&P Global Inc. (NYSE:SPGI) but lowered the firm’s price target on the stock to $475 from $497 ahead of the Q1 results. The analyst thinks a solid buy back program during 2022 should offer support for S&P Global Inc. (NYSE:SPGI)’s shares and he also expects strong execution as the company integrates operations with IHS Markit.
According to Insider Monkey’s fourth quarter data, 79 hedge funds held stakes in S&P Global Inc. (NYSE:SPGI), collectively worth $7.8 billion. TCI Fund Management is the biggest stakeholder of the company, with 3.7 million shares valued at $1.76 billion.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Rivian Automotive, Inc. (NASDAQ:RIVN), S&P Global Inc. (NYSE:SPGI) is one of the favorite stocks of billionaire Dan Loeb.
Here is what Baron FinTech Fund has to say about S&P Global Inc. (NYSE:SPGI) in its Q4 2021 investor letter:
“Shares of rating agency and data provider S&P Global Inc. increased after the company reported quarterly results that beat Street forecasts and raised full-year guidance. Revenue grew 13% and EPS grew 24% due to elevated issuance activity across bank loans and structured finance combined with strong growth in the Indices segment. Shares also benefited from the receipt of regulatory approvals for the pending merger with IHS Markit. We continue to own the stock due to the company’s long runway for growth and significant competitive advantages.”
9. Accenture plc (NYSE:ACN)
Third Point’s Stake Value: $518,188,000
Percentage of Third Point’s 13F Portfolio: 3.61%
Number of Hedge Fund Holders: 50
Accenture plc (NYSE:ACN) is an Irish professional services company that offers agile transformation, DevOps, application modernization, enterprise architecture, software and quality engineering, data management, and natural language processing, among other relevant enterprise-level tech expertise.
Securities filings reveal that Dan Loeb’s Third Point held 1.25 million Accenture plc (NYSE:ACN) shares in the fourth quarter of 2021, worth more than $518 million, representing 3.61% of the hedge fund’s total 13F securities.
In March 2022, Accenture plc (NYSE:ACN) made multiple acquisitions and investments in tech startups and companies working in similar sectors, such as Avieco, Alfa Consulting, Trancom ITS, Inrupt, AFD.TECH, Titan Space Technologies, and Good Chemistry Company. Accenture plc (NYSE:ACN) declared on March 17 a $0.97 per share quarterly dividend, in line with previous. The dividend is payable on May 13, to shareholders of the company as of April 14.
Accenture plc (NYSE:ACN) reported earnings for the first quarter of 2022 on March 17, posting an EPS of $2.54, exceeding analysts’ consensus estimates by $0.18. The $15.05 billion revenue was up 24.47% year-over-year, outperforming market predictions by approximately $380 million.
Baird analyst David Koning raised the price target on Accenture plc (NYSE:ACN) to $378 from $360 and maintained a Neutral rating on the shares on April 8. The analyst likes a lot about Accenture plc (NYSE:ACN) in the near-term. He admired the strong recent growth and margin expansion, and is positive on the future which involves expansion into quantum computing, space tech, and science smart materials.
According to Insider Monkey’s Q4 data, 50 hedge funds were bullish on Accenture plc (NYSE:ACN), compared to 56 funds in the preceding quarter. The total stakes owned in the fourth quarter amounted to more than $5 billion. Nicolai Tangen’s Ako Capital is the biggest position holder in Accenture plc (NYSE:ACN), with 2.4 million shares worth over $1 billion.
Here is what ClearBridge Investments Global Growth Strategy has to say about Accenture plc (NYSE:ACN) in its Q4 2021 investor letter:
“We were quite active during the quarter, leveraging volatility to add 10 new names to the portfolio while exiting seven others. Among our new purchases was Accenture. Ireland-based Accenture is the leading IT professional services company that offers the full life cycle of IT services including consulting, implementation and outsourcing. It is a key partner of organizations going through digital transformation and cloud adoption and we view the company as an agnostic way to gain exposure to the compressed digital transformation cycle that is occurring across all industries post COVID-19.”
8. Microsoft Corporation (NASDAQ:MSFT)
Third Point’s Stake Value: $538,112,000
Percentage of Third Point’s 13F Portfolio: 3.75%
Number of Hedge Fund Holders: 262
Dan Loeb owns 1.60 million shares of Microsoft Corporation (NASDAQ:MSFT), one of the Big Five US tech firms, worth $538.1 million, representing 3.75% of his hedge fund’s total 13F holdings.
On April 11, UBS analyst Karl Keirstead reiterated a Buy recommendation on Microsoft Corporation (NASDAQ:MSFT) but he now believes that the Office 365 adoption is likely to start decelerating due to high penetration and the work-from-home mandate easing post-pandemic. The shares tumbled after the analyst’s comments on the deceleration of Office 365.
Microsoft Corporation (NASDAQ:MSFT) declared on March 15 a $0.62 per share quarterly dividend, in line with previous. The dividend is payable on June 9, to shareholders of the company at the close of business on May 19. Microsoft Corporation (NASDAQ:MSFT)’s dividend yield on April 13 stood at 0.86%.
Hedge fund sentiment around Microsoft Corporation (NASDAQ:MSFT) was largely bullish in the December quarter. A total of 262 hedge funds reported owning stakes worth $75.6 billion in the company, compared to 250 funds the prior quarter, holding stakes valued at $65.8 billion. Ken Fisher Fisher Asset Management is the largest Microsoft Corporation (NASDAQ:MSFT) shareholder, with a position worth more than $9 billion as of Q4 2021.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”
7. Upstart Holdings, Inc. (NASDAQ:UPST)
Third Point’s Stake Value: $605,200,000
Percentage of Third Point’s 13F Portfolio: 4.22%
Number of Hedge Fund Holders: 20
Upstart Holdings, Inc. (NASDAQ:UPST) is a California-based company that operates a cloud lending platform, connecting with its network of bank partners by leveraging artificial intelligence. Dan Loeb’s Third Point owns 4 million Upstart Holdings, Inc. (NASDAQ:UPST) shares as of Q4 2021, worth $605.2 million, representing 4.22% of the total 13F holdings.
On February 15, Upstart Holdings, Inc. (NASDAQ:UPST) posted its Q4 financial results, reporting earnings per share of $0.89, beating market consensus estimates by $0.38. The revenue jumped 251.57% year-over-year to $304.85 million, topping analysts’ predictions by $42 million.
Loop Capital analyst Hal Goetsch on April 5 initiated coverage of Upstart Holdings, Inc. (NASDAQ:UPST) with a Buy rating and a $140 price target. The analyst observed that Upstart Holdings, Inc. (NASDAQ:UPST)’s artificial intelligence expertise expands consumer credit in a “responsible and inclusive way”. He added that the company’s platform also provides a huge productivity gain compared to traditional credit models.
According to the fourth quarter database of Insider Monkey, 20 hedge funds placed long calls on Upstart Holdings, Inc. (NASDAQ:UPST), with combined stakes of $1.3 billion. D E Shaw is a notable position holder in the company, with 1.72 million shares worth approximately $261 million.
Here is what Vulcan Value Partners Large Cap Fund has to say about Upstart Holdings, Inc. (NASDAQ:UPST) in its Q4 2021 investor letter:
“Upstart Holdings Inc. was another material detractor during the quarter. Upstart is an artificial intelligence (AI) and cloud-based lending platform. Upstart uses over 1600 variables in its AI models. Its lending platform delivers lower default rates, higher approval rates, lower rates for consumers, and higher returns on investment for its bank and institutional clients. As former owners of FICO, we believe Upstart has the potential to be the FICO of the 21st century. Recent stock price volatility has given us an opportunity to follow our investment discipline. During the third quarter of 2021, Upstart’s stock price increased significantly, and we materially reduced our position in the company. Following its most recent earnings release, our value increased but Upstart’s stock price began to decline significantly. With a significantly improved price to value ratio, we added to our position in Upstart. We simply took advantage of stock price volatility to manage risk in the portfolio and improve our returns and our prospective returns.”
6. Alphabet Inc. (NASDAQ:GOOG)
Third Point’s Stake Value: $614,172,000
Percentage of Third Point’s 13F Portfolio: 4.28%
Number of Hedge Fund Holders: 158
Securities filings for Q4 2021 reveal that billionaire Dan Loeb owns a stake worth over $614 million in Alphabet Inc. (NASDAQ:GOOG), representing 4.28% of the total 13F securities at Third Point. Alphabet Inc. (NASDAQ:GOOG) was formed as the parent company for Google and Google subsidiaries in 2015.
Alphabet Inc. (NASDAQ:GOOG)’s full-year revenue for 2021 stood at $257.6 billion, compared to $182.5 billion in the previous year. Net income increased in 2021 to $76 billion from $40.2 billion in 2020. On April 13, Alphabet Inc. (NASDAQ:GOOG) disclosed its intention to invest approximately $9.5 billion across its United States offices and data centers in 2022, compared to a $7 billion investment in 2021. This project will create about 12,000 new employment opportunities.
Tigress Financial analyst Ivan Feinseth raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,670 from $3,540 and reiterated a Strong Buy rating on the stock on March 18, stating that his revised target reflects a possible return of 37% from present levels. Alphabet Inc. (NASDAQ:GOOG) recently announced “extremely strong” Q4 results and its ongoing investment in Artificial Intelligence “continues to drive increasingly focused and helpful experiences for users and businesses”, the analyst told investors in a bullish thesis.
According to Insider Monkey’s fourth quarter database, 158 hedge funds placed long calls on Alphabet Inc. (NASDAQ:GOOG), holding collective stakes valued at $36.6 billion. Chris Hohn’s TCI Fund Management is the biggest Alphabet Inc. (NASDAQ:GOOG) shareholder, with 2.95 million shares worth $8.5 billion.
Elite investors are extremely bullish on Alphabet Inc. (NASDAQ:GOOG), just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Rivian Automotive, Inc. (NASDAQ:RIVN).
Here is what Vulcan Value Partners has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2021 investor letter:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet, performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet (Google) again with a margin of safety.”
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Disclosure: None. 10 Favorite Stocks of Dan Loeb’s Third Point is originally published on Insider Monkey.
