Billionaire Dan Loeb founded New York-based Third Point LLC, an asset management firm with $17 billion assets under management, in 1995. In a recent quarterly letter to investors, Mr. Loeb called the first quarter of this year “one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund”. The New York-based asset manager was down 2.3% in the first quarter of 2016, as compared to the 1.3% gain for the S&P 500 Index over the same time span. Nonetheless, the renowned investor said they “are well-positioned to seize the opportunities borne out of this chaos and are pleased to have preserved capital through a period of vicious swings in treacherous markets”. Despite the mild loss incurred in the first quarter of 2016, Third Point has generated an annualized return of 15.8% since 1996, more than double than the 7.3% return delivered by the S&P 500 gauge over the same period. With that in mind, let’s have a look at Third Point’s top five equity positions as of the end of the first quarter.
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#5. Yum! Brands Inc. (NYSE:YUM)
– Number of shares owned by Third Point LLC as of March 31: 5.50 Million
– Value of Third Point LLC’s holding as of March 31: $450.18 Million
Third Point LLC added 5.42 million shares of Yum! Brands Inc. (NYSE:YUM) to its existing position in the company during the first quarter of 2016, ending the three-month period with 5.50 million shares. The upped stake was valued at $450.18 million on March 31 and accounted for 4.2% of Third Point’s entire portfolio. In October 2015, the owner of fast food chains KFC, Pizza Hut and Taco Bell announced plans to spin-off its China business into an independent publicly-traded company, to be called Yum China Holdings. The restaurant operator has been pressured by activist investor Keith Meister of Corvex Capital to cut loose its China business, as various food safety scandals involving the company’s Chinese suppliers damaged the performance of the entire company. However, the company’s China business has successfully recovered from the disastrous effects of those scandals. Shares of Yum! Brands rose 9% since the beginning of the year. Corvex Capital owned 21.04 million shares of Yum! Brands Inc. (NYSE:YUM) at the end of March.