In this article, we discuss 10 new stock picks of billionaire Dan Loeb.
Dan Loeb is an American activist investor and hedge fund manager, who founded Third Point in 1995, which is a New York-based hedge fund focused on event-driven value investing. As per the 13F filings from Q3 2021, Third Point’s portfolio is worth $18.3 billion. With a top ten holdings concentration of 56.87%, Dan Loeb’s Third Point invests primarily in the utilities and telecommunications, information technology, healthcare, finance, consumer discretionary, and communications sectors.
Dan Loeb, a Columbia University graduate, has a distinct approach to investing. He seeks out distressed companies, stripping them of inefficient management practices, and returning them to a profitable position for shareholders. Dan Loeb, via Third Point, invests in public equity, fixed income, and ADR markets worldwide.
The hedge fund bought 12 new stocks in Q3 2021, made additional purchases in 18 equities, sold out of 25 securities, and reduced stakes in 12 companies. The top buys of Dan Loeb’s Third Point in the third quarter included Amazon.com, Inc. (NASDAQ:AMZN), SentinelOne, Inc. (NYSE:S), and Activision Blizzard, Inc. (NASDAQ:ATVI). Whereas, the fund reduced holdings in Uber Technologies, Inc. (NYSE:UBER), Intel Corporation (NASDAQ:INTC), and JD.com, Inc. (NASDAQ:JD).
The most notable holdings in the third quarter portfolio of billionaire Dan Loeb include The Walt Disney Company (NYSE:DIS), Meta Platforms, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT).
Dan Loeb of Third Point
Our Methodology
We used the Q3 2021 portfolio of billionaire Dan Loeb’s Third Point for this analysis, selecting the 10 newest additions to the hedge fund’s 13F securities. The stocks are ranked according to the stake value of Third Point in each holding.
New Stock Picks of Billionaire Dan Loeb
10. Blue Whale Acquisition Corp I (NASDAQ:BWC)
Third Point’s Stake Value: $19,922,000
Percentage of Third Point’s 13F Portfolio: 0.10%
Number of Hedge Fund Holders: N/A
Blue Whale Acquisition Corp I (NASDAQ:BWC) is a blank check company that is focused on acquiring top-notch growth companies in the media, entertainment, and technology sectors. Blue Whale Acquisition Corp I (NASDAQ:BWC) is affiliated with Mubadala Capital, the asset management subsidiary of Mubadala Investment Company PJSC, a prominent global investor based in Abu Dhabi, with over $243 billion in assets under management. Blue Whale Acquisition Corp I (NASDAQ:BWC) priced its initial public offering of 20 million units at $10.00 per unit on August 4, 2021.
Dan Loeb’s Third Point acquired a stake in Blue Whale Acquisition Corp I (NASDAQ:BWC) in the third quarter of 2021, buying 2 million shares worth $19.9 million, representing 0.10% of the fund’s total Q3 securities.
9. Sema4 Holdings Corp. (NASDAQ:SMFR)
Third Point’s Stake Value: $21,214,000
Percentage of Third Point’s 13F Portfolio: 0.11%
Number of Hedge Fund Holders: 34
Sema4 Holdings Corp. (NASDAQ:SMFR) is headquartered in Connecticut and functions as a health information company, assisting with improving diagnosis, treatment, and prevention of disease through data analysis and an intelligence platform driven by artificial intelligence. Billionaire Dan Loeb purchased a $21.2 million stake in Sema4 Holdings Corp. (NASDAQ:SMFR) in Q3 2021, which represents 0.11% of his total 13F portfolio for the period.
On January 18, Sema4 Holdings Corp. (NASDAQ:SMFR) agreed to acquire OPKO Health, Inc. (NASDAQ:OPK)’s wholly-owned subsidiary, GeneDx. Sema4 Holdings Corp. (NASDAQ:SMFR) will make an upfront cash payment of $150 million plus 80 million in Sema4 Holdings Corp. (NASDAQ:SMFR) shares. The deal also includes additional $150 million revenue-based milestone payments over the next two years, payable in cash or Sema4 Holdings Corp. (NASDAQ:SMFR) shares. The total aggregate consideration, including potential milestones, is approximately $623 million.
Sema4 Holdings Corp. (NASDAQ:SMFR) shares on January 10 jumped 9% after the company announced that it expects Q4 total revenues of $50 million-$52 million, as compared to its prior guidance of $46.6 million-$49.6 million.
Goldman Sachs analyst Matthew Sykes initiated coverage of Sema4 Holdings Corp. (NASDAQ:SMFR) with a Buy rating and a $12 price target on November 19. The analyst said that the company is a “top player” in germline and reproductive testing, and is expanding into the “large” oncology market.
According to Insider Monkey’s Q3 data, 34 hedge funds were long Sema4 Holdings Corp. (NASDAQ:SMFR), with stakes equaling $483.7 million. Deerfield Management is the largest stakeholder of the company, with 13.8 million shares worth $105.1 million.
In addition to The Walt Disney Company (NYSE:DIS), Meta Platforms, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT), Sema4 Holdings Corp. (NASDAQ:SMFR) is one of the stocks to look out for according to billionaire Dan Loeb.
8. Archer Aviation Inc. (NYSE:ACHR)
Third Point’s Stake Value: $22,200,000
Percentage of Third Point’s 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 28
Archer Aviation Inc. (NYSE:ACHR) is a California-based urban air mobility company, which manufactures and operates electric vertical takeoff and landing aircrafts to carry passengers. Dan Loeb’s Third Point purchased 2.50 million shares of Archer Aviation Inc. (NYSE:ACHR) in the third quarter of 2021, worth $22.20 million, representing 0.12% of his total Q3 securities.
On January 18, Barclays analyst David Zazula lowered the price target on Archer Aviation Inc. (NYSE:ACHR) to $5.50 from $10 and kept an Equal Weight rating on the shares. The analyst sees Archer Aviation Inc. (NYSE:ACHR)’s first flight hover accomplishment as “tangible evidence of management meeting aggressive plan expectations”. However, despite the company’s “impressive hires and positive momentum” for the business, he reduced the price target to match increased dilution risk “as equity markets appear less accommodating.”
According to the third quarter database of Insider Monkey, 28 hedge funds were long Archer Aviation Inc. (NYSE:ACHR), with stakes totaling $173.5 million. Highbridge Capital Management held the leading stake in Archer Aviation Inc. (NYSE:ACHR), with 2.2 million shares worth $21.6 million.
7. Rocket Lab USA, Inc. (NASDAQ:RKLB)
Third Point’s Stake Value: $24,195,000
Percentage of Third Point’s 13F Portfolio: 0.13%
Number of Hedge Fund Holders: 26
Headquartered in California, Rocket Lab USA, Inc. (NASDAQ:RKLB) is an aerospace company, focused on developing rocket launch and control systems for the space and defense industries, catering to customers in the commercial, civil, defense, and academic sectors.
In the third quarter of 2021, billionaire Dan Loeb purchased 1.50 million shares of Rocket Lab USA, Inc. (NASDAQ:RKLB), worth $24.1 million, representing 0.13% of his Q3 portfolio.
Rocket Lab USA, Inc. (NASDAQ:RKLB) on February 2 announced it will open a new space systems complex in Littleton, Colorado, to support growing customer demand for flight software, mission simulation, guidance, navigation, and control services.
On January 28, Deutsche Bank analyst Edison Yu said that Rocket Lab USA, Inc. (NASDAQ:RKLB) remains his top pick for 2022 in the space sector. Ahead of the company’s Q4 report, the analyst increased 2022 forecasts to factor in the three recent acquisitions and updated launch schedule. He maintains a Buy rating on Rocket Lab USA, Inc. (NASDAQ:RKLB) with an $18 price target, saying it is the “most promising rocket launch company after SpaceX.”
In Q3 2021, 26 hedge funds were bullish on Rocket Lab USA, Inc. (NASDAQ:RKLB), with stakes totaling approximately $589 million. Corsair Capital Management was one of the prominent stakeholders of Rocket Lab USA, Inc. (NASDAQ:RKLB) as of the close of the third quarter, with 32,696 shares worth $319,000.
Rocket Lab USA, Inc. (NASDAQ:RKLB) is gaining the attention of smart investors, just like The Walt Disney Company (NYSE:DIS), Meta Platforms, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT).
6. Membership Collective Group Inc. (NYSE:MCG)
Third Point’s Stake Value: $46,650,000
Percentage of Third Point’s 13F Portfolio: 0.25%
Number of Hedge Fund Holders: 9
Membership Collective Group Inc. (NYSE:MCG) is a London-based company operating a global membership platform of physical and digital networks that connects members worldwide. The community at Membership Collective Group Inc. (NYSE:MCG) uses the MCG platform to work, socialize, connect, and be creative.
In Q3 2021, Membership Collective Group Inc. (NYSE:MCG) was a new arrival in Dan Loeb’s portfolio, with the billionaire buying 3.75 million shares of the company, worth $46.65 million. The stock represents 0.25% of Third Point’s Q3 investments.
Goldman Sachs analyst Stephen Grambling on December 14 downgraded Membership Collective Group Inc. (NYSE:MCG) to Sell from Neutral with a price target of $13, down from $14, telling investors that he sees the company being on a “more prolonged recovery” path compared to the rest of his coverage, given COVID-19 cases increasing in Europe and governments taking more restrictive measures than in North America.
According to the third quarter database of Insider Monkey, 9 hedge funds were bullish on Membership Collective Group Inc. (NYSE:MCG), with stakes totaling $167.5 million. Pelham Capital is the biggest stakeholder of the company, holding 4.5 million shares worth $57.1 million.
Here is what Baron Funds has to say about Membership Collective Group Inc. (NYSE:MCG) in its Q3 2021 investor letter:
“During the quarter, we purchased Membership Collective Group Inc. (“MCG”), a global membership platform centered around club houses in metropolitan areas. Its trademark Soho House brand has 30 Houses with more than 111,000 members globally, 94% average annual retention, and a wait list of over 59,000 people. In addition to the core Soho House brand, the company has additional membership brands including Soho Works, Scorpios Beach Club, The Ned Club as well as adjacent/digital memberships, including Soho Friends and Soho House Digital. We believe MCG has a valuable, unique business model as a scaled global membership platform. Its strong brand, evidenced by its long wait list, leads to very low marketing expenses and high retention, while also driving strong recurring revenue. There are currently 30 Soho Houses open, and 5 to 7 new openings are planned per year, providing a clear line of sight for attractive long-term growth. Over the long term, management believes they can have close to 100 houses globally.
We believe MCG’s growth pipeline, recurring revenue potential, operating leverage, and de-leveraging should drive solid financial growth in the medium term. We expect revenue to grow at a 34% CAGR between 2021 and 2025 as it expands the number of houses, expands other membership programs, and spending per member increases. We also expect EBITDA margins to benefit from the ramp up in new houses (the company targets House-Level Contribution Margins of 20% to 30% by year five) as well as from improving operations of existing houses and leveraging corporate expenses. The combination of strong top-line revenue, expanding EBITDA margins, and the potential for investors to better understand the recurring revenue business model should result in significant shareholder value over time.”
5. Jackson Financial Inc. (NYSE:JXN)
Third Point’s Stake Value: $47,115,000
Percentage of Third Point’s 13F Portfolio: 0.25%
Number of Hedge Fund Holders: 22
Jackson Financial Inc. (NYSE:JXN) is a Michigan-based life insurance company that primarily provides a suite of annuities as retirement savings and income solutions to retail investors in the United States.
Jackson Financial Inc. (NYSE:JXN) is a new arrival in Dan Loeb’s Q3 portfolio, with the billionaire buying 1.8 million shares of the company, worth $47.1 million, representing 0.25% of his third quarter 13F securities.
On November 9, Jackson Financial Inc. (NYSE:JXN) declared a $0.50 per share quarterly dividend, which was paid on December 9, to shareholders of record on November 19. The board also authorized a $300 million share repurchase program for Jackson Financial Inc. (NYSE:JXN)’s Class A common stock.
Jefferies analyst Suneet Kamath initiated coverage of Jackson Financial Inc. (NYSE:JXN) on January 25 with a Buy rating and a $52 price target. The analyst believes Jackson Financial Inc. (NYSE:JXN) is a “misunderstood story” given its limited sell-side coverage and track record as a public company, “suggesting the potential for a re-rating as investors get more comfortable with the story”.
Sessa Capital holds the largest stake in Jackson Financial Inc. (NYSE:JXN) as of Q3 2021, with 4.4 million shares worth approximately $117 million. Overall, 22 hedge funds monitored by Insider Monkey in the third quarter were long Jackson Financial Inc. (NYSE:JXN), with stakes valued at $345.7 million.
Here is what Curreen Capital has to say about Jackson Financial Inc. (NYSE:JXN) in its Q4 2021 investor letter:
“We cut a weed with Conduent to water a flower with Jackson. We added to Jackson, which has blossomed into a flower. In our Q3 letter I highlighted the limited information on this recent spinoff – and management has capably addressed many of the unknowns. On capital allocation, Jackson initiated a dividend and a share repurchase plan for about 10% of the company. Management then moved quickly and bought back at least 5% of Jackson’s shares at very attractive prices. Management refinanced its short-term debt on attractive terms. A director and an executive also bought stock in the quarter. Each of these actions made Jackson more of a flower. We averaged up (paying $32.78/share) and made Jackson our largest holding.”
4. CF Industries Holdings, Inc. (NYSE:CF)
Third Point’s Stake Value: $55,820,000
Percentage of Third Point’s 13F Portfolio: 0.30%
Number of Hedge Fund Holders: 49
CF Industries Holdings, Inc. (NYSE:CF) is an Illinois-based company producing hydrogen and nitrogen products for clean energy, fertilizer, controlling emissions, and relevant global industrial applications. Dan Loeb added CF Industries Holdings, Inc. (NYSE:CF) to his third quarter portfolio, buying 1 million shares worth $55.8 million.
RBC Capital analyst Andrew Wong on January 24 raised the price target on CF Industries Holdings, Inc. (NYSE:CF) to $75 from $73 but kept a Sector Perform rating on the shares. The analyst expects a solid quarter and positive outlook from CF Industries Holdings, Inc. (NYSE:CF) supported by strong nitrogen market fundamentals, but his neutral stance reflects greater variability in nitrogen prices.
On February 2, CF Industries Holdings, Inc. (NYSE:CF) declared a $0.30 per share quarterly dividend, in line with previous. The dividend is payable on February 28, to shareholders of record on February 15.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 49 funds were bullish on CF Industries Holdings, Inc. (NYSE:CF), with stakes totaling $1.27 billion, as compared to 47 funds in the preceding quarter, holding stakes worth $955.5 million in CF Industries Holdings, Inc. (NYSE:CF). Glendon Capital Management held the largest stake in CF Industries Holdings, Inc. (NYSE:CF) as of Q3 2021, with 4.95 million shares worth $276.7 million.
3. Archaea Energy Inc. (NYSE:LFG)
Third Point’s Stake Value: $80,874,000
Percentage of Third Point’s 13F Portfolio: 0.44%
Number of Hedge Fund Holders: 25
Archaea Energy Inc. (NYSE:LFG) is a Pennsylvania-based renewable natural gas (RNG) company that develops RNG facilities to capture waste emissions and turn them into low carbon fuel. Billionaire Dan Loeb, via Third Point, acquired a position worth $80.8 million in Archaea Energy Inc. (NYSE:LFG) in the third quarter of 2021. The stock accounts for 0.44% of the fund’s Q3 investment portfolio.
On January 27, Archaea Energy Inc. (NYSE:LFG) expanded its commercial partnership with FortisBC Energy, a subsidiary of Fortis Inc. (NYSE:FTS), by inking a new long-term RNG purchase and sale agreement. FortisBC will purchase up to 7.6 million MMBtu of RNG generated by Archaea Energy Inc. (NYSE:LFG) annually for a fixed fee for 20 years. The deal is expected to commence in 2022, with the full annual quantity starting in 2025.
Citi analyst Timm Schneider lowered the price target on Archaea Energy Inc. (NYSE:LFG) on January 18 to $29 from $31 and kept a Buy rating on the shares. The analyst now has a higher cost of capital assumption and is marking-to-market his forward multiples to current peer valuation ranges on the heels of the recent broader renewable and alternative energy market sell-off.
According to the Q3 database of Insider Monkey, 25 hedge funds were bullish on Archaea Energy Inc. (NYSE:LFG), with stakes equaling $317.7 million.
2. Activision Blizzard, Inc. (NASDAQ:ATVI)
Third Point’s Stake Value: $154,780,000
Percentage of Third Point’s 13F Portfolio: 0.84%
Number of Hedge Fund Holders: 80
Activision Blizzard, Inc. (NASDAQ:ATVI) delivers interactive entertainment and advertising content to customers in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Billionaire Dan Loeb acquired a stake in Activision Blizzard, Inc. (NASDAQ:ATVI) in Q3 2021, buying 2 million shares worth $154.78 million, representing 0.84% of his 13F securities for the period.
On February 4, 2021, Activision Blizzard, Inc. (NASDAQ:ATVI) declared a $0.47 per share annual dividend, a 14.6% increase from its prior dividend of $0.41, which was paid on May 6.
On January 18, Microsoft Corporation (NASDAQ:MSFT) announced that it is buying Activision Blizzard, Inc. (NASDAQ:ATVI) in its largest acquisition to date, for $68.7 billion. This will mark Microsoft Corporation (NASDAQ:MSFT)’s entry into the videogame market. The deal values Activision Blizzard, Inc. (NASDAQ:ATVI) at $95 a share and is expected to close in FY2023.
KeyBanc analyst Tyler Parker lowered the price target on Activision Blizzard, Inc. (NASDAQ:ATVI) on January 28 to $95 from $100 and kept an Overweight rating on the shares. Though the market is pricing in a fair amount of regulatory concern with the Microsoft Corporation (NASDAQ:MSFT) deal, the analyst believes it will go through successfully.
In the third quarter of 2021, 80 hedge funds tracked by Insider Monkey were long Activision Blizzard, Inc. (NASDAQ:ATVI), with stakes totaling $4.28 billion, as compared to 78 funds in the prior quarter, holding stakes worth $3.65 billion in Activision Blizzard, Inc. (NASDAQ:ATVI).
D E Shaw, the largest Activision Blizzard, Inc. (NASDAQ:ATVI) stakeholder, increased its position in the company by 1084% in Q3 2021, holding 9.8 million shares worth $765.25 million.
Here is what Cooper Investors has to say about Activision Blizzard, Inc. (NASDAQ:ATVI) in its Q4 2021 investor letter:
“In our previous letter we discussed the Responsible Investing aspects around the workplace issues disclosed earlier in the year at Activision Blizzard. Subsequently, further information emerged including allegations and anecdotes of historic awareness and inaction to the issues within the ranks of executive management. So too the latest earnings announcement saw the Blizzard studio push out several game launches, a very real consequence of workplace issues in a human capital-based business. The remedial efforts required are greater than we originally thought and the position was sold in what has been a disappointing experience.”
1. Alight, Inc. (NYSE:ALIT)
Third Point’s Stake Value: $195,160,000
Percentage of Third Point’s 13F Portfolio: 1.06%
Number of Hedge Fund Holders: 42
Alight, Inc. (NYSE:ALIT) is one of the newest additions in the third quarter portfolio of Dan Loeb’s Third Point, with the billionaire purchasing 17 million shares of the company, worth $195.1 million, representing 1.06% of the fund’s 13F securities. Alight, Inc. (NYSE:ALIT) is an Illinois-based provider of employer solutions, such as benefits and payroll solutions, as well as employee well-being programs that enrich company cultures.
Credit Suisse analyst Kevin McVeigh initiated coverage of Alight, Inc. (NYSE:ALIT) on August 16 with an Outperform rating and a $15 price target. The analyst believes Alight, Inc. (NYSE:ALIT) offers a “unique opportunity at an attractive entry level for an accelerating organic growth story-fueled by higher-growth analytics-leveraging datasets”.
According to the Q3 database of elite hedge funds maintained by Insider Monkey, 42 funds were bullish on Alight, Inc. (NYSE:ALIT), with collective stakes amounting to $1.27 billion. FPR Partners is the biggest Alight, Inc. (NYSE:ALIT) stakeholder as of the close of the third quarter of 2021, with 18.5 million shares worth $212.8 million.
You can also take a look at Top 10 Stock Picks of NewGen Asset Management and 10 New Stock Picks of Brian Higgins’ King Street Capital.
Follow Insider Monkey on Twitter
Suggested articles:
- Analysts Are Recommending These 10 Dividend Stocks
- John Hickenlooper Latest Portfolio: Stocks to Watch
- Top 10 Tech and Automation Stocks in Cathie Wood’s Portfolio
Disclosure: None. 10 New Stock Picks of Billionaire Dan Loeb is originally published on Insider Monkey.
