Third Point's Q4 Letter: Updates on Baxter, Campbells Soup, United Technologies & Nestle

Dan Loeb and Third Point are out with their fourth quarter letter to investors.  Third Point finished 2018 down 11.3%, only the 4th time in 24 years they've lost more than 1% in a year. 

Their Q4 letter includes a large section on the state of the credit markets, as well as portfolio updates on some of their equity holdings like Baxter (BAX), Nestle (NSRGY), Campbells Soup (CPB), and United Technologies (UTX).


Third Point's Q4 Letter: Updates on Equity Positions

On CPB: They settled their proxy fight that gave them a mix of board representation as well as regular access to the board and executives.   They helped CPB recruit Mark Clouse as new CEO.  They're looking for the company to "repair the balance sheet, execute an operational turnaround of the business, and explore all options to create long-term value for  shareholders."


On UTX:  "Despite the separation announcement, UTC’s sum-of-the-parts  discount  has  continued  to widen  and  the  valuation  gap  versus  UTC’s  closest  multi-industry   peer,   Honeywell International, has reached a new 10-year high.The coming separation will shine a greater spotlight on the large valuation gap to UTC’s pure-play peers.During the separation process, we  expect  the  management  team  to  highlight  UTC’s  asset  quality  and  to  increase transparency  around  Pratt & Whitney’s very significant multi-year  inflection  in  free  cash flow generation."


On BAX: Operating margins of 17.4% have been achieved and they think there's further upside to 23%.  Since 2016 the company has returned $4 billion to shareholders and used another $1 billion for business development.  "Over the next 12-24 months, Baxter  expects  to  start  reaping  the  fruits  of  its  labor  with  several  new  product  launches including Spectrum IQ and Evo IQ pumps, and new generic injectable drugs. The innovation cycle  should  serve  to  drive  revenue  growth  acceleration  and  contribute  positively  to underlying operating margins."


Embedded below is Third Point's Q4 letter:



For more recent investor letters, we also posted up Warren Buffett's annual letter, as well as excerpts from Baupost Group's letter and Sequoia Fund's letter too.

Third Point Trims Baxter Stake

Dan Loeb's hedge fund firm Third Point has filed a Form 4 with the SEC regarding its position in Baxter International (BAX). 

Per the filing, Third Point sold 5 million BAX shares at $64.23 on November 6th.  After this sale, they still own over 36 million shares and one of their partners, Munib Islam, is on Baxter's board.

For more on this fund, we've also posted Third Point's Q3 letter here.

Per Google Finance, Baxter International "provides renal and hospital products. The Company operates through two segments: Hospital Products and Renal. Its Hospital Products business manufactures sterile intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, parenteral nutrition therapies, infusion pumps, inhalation anesthetics and biosurgery products. The Renal business offers a portfolio to meet the needs of patients with end-stage renal disease, or irreversible kidney disease and acute kidney injuries, including technologies and therapies for peritoneal dialysis (PD), hemodialysis (HD), continuous renal replacement therapy (CRRT) and additional dialysis services. Its products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices and by patients at home under physician supervision. "

Third Point Q2 Letter: Re-enters Alibaba, Adds BlackRock Stake

Dan Loeb's hedge fund firm Third Point was up 4.6% for the second quarter and is up 10.7% for the year.  Third Point's second quarter letter reveals they've re-entered Alibaba (BABA).  They feel now is the time to re-enter due to the company's launch of personalized advertising, new ad tech for brand advertisers, as well as revenue potential from higher ad loads, among other reasons.

Backing out net cash and some other stakes, Loeb's firm feels Alibaba's core business alone is worth $121 per share (around 15x their 2019 EPS estimate of $8.20) with earnings growing 30% year-on-year.  They feel BABA can close the valuation gap with competitors like Tencent, which trades at 32x consensus 2018 EPS.

Third Point also reveals a stake in BlackRock (BLK) in the letter.  Rather than simply being an asset manager. they feel it's "becoming a network or index-like business, with earnings power driven by ETFs (via iShares) and data & analytic services (via Aladdin).  They point out they're basically oligopoly businesses.

Also, a few months ago we highlighted how this hedge fund has gone activist on Nestle and we posted Third Point's letter on Nestle here.

Embedded below is Third Point's Q2 2017 letter:



You can download a .pdf copy here.

For other recent hedge fund letters, you can also read Greenlight Capital's Q2 letter here.

Third Point Trims Baxter Stake

Dan Loeb's hedge fund firm Third Point has filed a 13D and Form 4 with the SEC regarding its stake in Baxter International (BAX). Per the 13D, Third Point now owns 7.5% of BAX with 41 million shares.

The Form 4 indicates Third Point sold 5 million shares on June 1st at $59.5. After this sale, they still own over 41 million shares.

For more from this fund, check out Third Point's Q1 letter.

Per Google Finance, Baxter "provides renal and hospital products. The Company operates through two segments: Hospital Products and Renal. Its Hospital Products business manufactures sterile intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, parenteral nutrition therapies, infusion pumps, inhalation anesthetics and biosurgery products. The Renal business offers a portfolio to meet the needs of patients with end-stage renal disease, or irreversible kidney disease and acute kidney injuries, including technologies and therapies for peritoneal dialysis (PD), hemodialysis (HD), continuous renal replacement therapy (CRRT) and additional dialysis services. Its products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices and by patients at home under physician supervision. ."

Third Point Trims Baxter International Stake

Dan Loeb's hedge fund firm Third Point has filed an amended 13D and a Form 4 with the SEC regarding its stake in Baxter International (BAX).  Per the filing, Third Point now owns 8.5% of BAX with just over 46 million shares.

Per the Form 4, they sold over 5.9 million shares on February 28th at $50.35.  As detailed in our Hedge Fund Wisdom newsletter, Baxter has been Third Point's top position for some time, with a stake worth over $2 billion.  You can view the rest of Third Point's portfolio in the brand new issue.

Per Google Finance, Baxter International is "provides a portfolio of essential renal and hospital products, including home, acute and in-center dialysis; sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition; biosurgery products and anesthetics, and pharmacy automation, software and services. The Company operates through two segments: Hospital Products and Renal. Its Hospital Products business manufactures IV solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, infusion pumps, inhalation anesthetics, and biosurgery products. The business also provides products and services related to pharmacy compounding, and drug formulation. The Renal business provides products and services to treat end-stage renal disease, or irreversible kidney failure and acute kidney injuries."

For more on this hedge fund, also check out Third Point's Q4 letter.

Third Point Q2 Letter: Long Didi Chuxing & Energy Credit

Dan Loeb's hedge fund Third Point is out with its Q2 letter.  In it, they talk about their new private investment in Didi Chuxing, a Chinese ridesharing service that currently has more market share than Uber in China.  Apple (AAPL) also recently invested. 

Third Point also updates their stake in Baxter (BAX) and talks about their increased energy credit exposure.

Third Point's Q2 letter is embedded below:



You can download a .pdf copy here.

For other recent hedge fund letters, check out Greenlight Capital's Q2 letter.

Third Point's Q3 Letter on Baxter, Seven & i Holdings

Dan Loeb's hedge fund firm Third Point in its third quarter letter talks about its investments in Baxter and Seven & i Holdings in Japan.

Regarding Baxter, Third Point has joined the board and helped select the new CEO.  They see an execution and portfolio reshaping story as well as margin expansion.

Third Point also owns Japan's Seven & i Holdings (which owns the 7-11 convenience stores).  They think the company should get rid of its underperforming Ito Yokado stores to become a pureplay on convenience stores.  As with some of their other theses in Japan, they're also looking for the company to eventually focus on capital return via buybacks and dividends.

Embedded below is Third Point's Q3 letter:



We've also highlighted other recent shorting activity from Third Point.

Third Point Gets Board Seat at Baxter

Dan Loeb's hedge fund firm Third Point has filed an amended 13D with the SEC regarding its activist position in Baxter (BAX).  Per the filing, Third Point now owns 9.9% of the company with over 53.85 million shares.

This is up slightly from the 52.5 million shares Third Point owned previously, though the filing shows their most recent buying activity as August 7th for 1.35 million shares at $41.80. 

The filing was made due to activity on September 29th as the firm entered into a support agreement with the company.  Additionally, Third Point's Munib Islam will join Baxter's board of directors.

Third Point also agreed to a standstill whereby they won't acquire more than 13% of the company's shares.

Third Point has already increased its Baxter stake in August.  For more from this hedge fund, you can view Third Point's Q2 letter here.

Third Point Increases Baxter Holdings

Earlier this week, we highlighted how Dan Loeb's hedge fund Third Point disclosed a new activist stake in Baxter (BAX).  Third Point just filed an amended 13D and indicates their position size is now even larger.

They now own 9.6% of the company with over 52.5 million shares.  This is up from the 37.92 million shares they disclosed just a few days ago.

Third Point is seeking two board seats in order to help select a new CEO.

For more on this hedge fund, be sure to check out Third Point's Q2 letter.

Third Point Goes Activist on Baxter

Dan Loeb's hedge fund firm Third Point has filed a 13D with the SEC regarding Baxter (BAX).  Per the filing, Third Point now owns 7% of the company with over 37.9 million shares.

This is a new position for the hedge fund and the filing was made due to activity on August 4th.  The filing also details their trading activity and Loeb's firm was out buying BAX in mid-to-late June and throughout July.  They really ramped up buying in the first few days of August around $40.49.

Third Point is seeking to gain two board seats in order to help in selecting a new CEO and sent a letter to Baxter. You can view the letter here

For more from Loeb's firm, head to Third Point's Q2 letter.