Dover Corp (DOV), DowDuPont Inc (DWDP) & More: Billionaire Dan Loeb’s Third Point Q3 Letter and Portfolio Updates

In DowDuPont Inc (NYSE:DWDP), Third Point held 16 million shares at the end of June, with the $1 billion stake being its second-largest in terms of value. This is one of Dan Loeb’s older investments, as the fund first held shares of the Dow Chemical Company back in 2013. In 2015, the fund got two board seats and negotiated with management regarding the company’s future after the merger with E I Du Pont De Nemours And Co (NYSE:DD). After the merger had been completed, DowDuPont Inc (NYSE:DD) announced that it would separate into three independent companies, which is something that Third Point suggested back when it added the company to its portfolio.

“[…] DowDuPont carries an unlevered balance sheet and retains significant M&A optionality. Yet, DowDuPont trades at just 8.6x consensus EBITDA in 2019, a substantial discount to its sum-of-the-parts when we look at the multiples of the likely comparables for the three (or more) Spin-Cos. As a result, we continue to see significant upside to our investment in DowDuPont,” Third Point said.

Nestle SA (ADR) (OTCMKTS:NSRGY) is one of Dan Loeb ‘s European investments, although since the position was not disclosed in its second-quarter 13F, the fund did not buy its US-listed ADR shares. According to the letter, in June the fund acquired a $3.5 billion stake in the company and pointed out four ways to improve the company’s value: “1) set a specific margin target; 2) increase leverage to return more capital to shareholders; 3) reshape the portfolio; and 4) monetize the legacy stake in L’Oréal.”

Third Point praised Nestle SA (ADR) (OTCMKTS:NSRGY)’s plans to sell assets and provide a margin target of 17.5% to 18.5%. In addition, Nestle’s management has expressed a commitment to reaccelerate revenue growth to mid-single digits and to launch a CHF20 billion ($20.21 billion) stock buyback. In this way, Dan Loeb and his team believe that Nestle SA (ADR) (OTCMKTS:NSRGY) could reach double-digit EPS growth by 2020.

Disclosure: None