Billionaire Dan Loeb’s Top Picks Register Disappointing Returns

#2. Allergan plc (NYSE:AGN)

– Shares Owned by Third Point LLC (as of December 31): 5.40 Million

– Value of Third Point’s Holding (as of December 31): $1.69 Billion

– Q1 Return: -14.2%

The New York-based hedge fund appears to have made a huge mistake when boosting its position in Allergan plc (NYSE:AGN) by 1.73 million shares in the fourth quarter of last year, as the shares of the Botox maker have plummeted following Pfizer Inc. (NYSE:PFE)’s decision to abandon the multi-billion-dollar inversion deal. The 5.40 million-share stake owned by Third Point was valued at $1.69 billion at the end 2015 and is currently worth only $1.19 billion, assuming it remained unchanged. Earlier this month, the U.S. Treasury Department issued changed regulations affecting tax inversions, which effectively blocked the mega-merger between the New York-based Pfizer and the Dublin-based pharmaceutical company. Pfizer also agreed to pay a break-up fee of $150 million to cover expenses associated with the freshly-failed transaction. Most investors are currently asking themselves whether the standalone Allergan will be able to achieve attractive bottom- and top-line growth in the upcoming years. It appears that the company’s 70 mid-to-late stage programs included in its product pipeline, which include 14 anticipated approvals and 16 regulatory submission throughout 2016, will most likely push the company forward. Allergan was the most popular stock within our database at the end of 2015, with a whopping number of 159 hedge fund managers being invested in the company at the time. John Paulson’s Paulson & Co. was the owner of 5.53 million shares of Allergan plc (NYSE:AGN) at the end of December.

#1. Baxter International Inc. (NYSE:BAX)

– Shares Owned by Third Point LLC (as of December 31): 53.85 Million

– Value of Third Point’s Holding (as of December 31): $2.05 Billion

– Q1 Return: 8.0%

Baxter International Inc. (NYSE:BAX) was largest equity position in Mr. Loeb’s equity portfolio at the end of the fourth quarter of 2015, representing the only position valued above the $2.0 billion-mark within his portfolio. The 53.85 million-share stake did not suffer any changes during the December quarter and accounted for 20.84% of Third Point’s equity portfolio on December 31. It appears that Mr. Loeb’s investment in the healthcare company has somewhat offset the losses generated by other positions, as Baxter’s shares have returned nearly 11% year-to-date. Baxter International markets a wide portfolio of renal and hospital products such as home, acute and in-center dialysis; sterile IV solutions; infusion systems and devices; and biosurgery products and anesthetics, to name just a few. The company’s net sales for 2015 totaled $9.97 billion, down from $10.72 billion reported for 2014. Net sales declined 7% year-on-year based on actual currency rates, but increased 1% on a constant currency basis. Baxter’s shares are currently trading around 23.8-times expected earnings, notably above the forward P/E multiple of 18.0 for the healthcare equipment sector. There were 51 money managers tracked by our team with stakes in the pharma company, who aggregately amassed almost 19% of the company’s total number of shares. Ken Griffin’s Citadel Advisors LLC was very bullish on Baxter International Inc. (NYSE:BAX) in the fourth quarter, ending 2015 with 7.55 million shares.

Disclosure: None