Dan Loeb's Third Point Buys Kraft, Various Healthcare Plays: July Exposure Report

Just yesterday we posted up Dan Loeb & Third Point's Q2 letter and now we have some more portfolio metrics in the form of their latest monthly exposure report.  In July, Third Point Offshore was up 1.6% and is up 5.5% for the year.

Here are a few new takeaways from their latest exposure report:


- Long Kraft (KFT): The biggest news is that Third Point has disclosed a new position in Kraft Foods (KFT) and it is now their fifth largest position.  The company of course will be splitting into two: a North American grocery business and an emerging snacks business.

Although Pershing Square Capital no longer owns KFT shares, you can see Ackman's presentation on Kraft from a few years ago.  Third Point is most likely playing the spin-off, though.  Nelson Peltz's Trian Fund has also been a large owner of KFT.


- Long Healthcare Plays: Loeb's hedge fund also appears to have started new positions in UnitedHealth Group (UNH), Humana (HUM), Wellpoint (WLP), and Cigna (CI).  All of these names were 'top losers' for the fund during the month.  This is worth highlighting because it is the first time these stakes have been disclosed.  We recently flagged why David Einhorn likes Cigna as he recently bought the name as well.


- Third Point is net long the Americas by 70%, but net short EMEA by -4% and net short Asia by -10%.


- In equities, Loeb's firm is 35.4% net long (67.6% long and -32.2% short).  This marks a decent increase from June, where they were net long 27.3%.  Their largest net long sector exposure comes in technology, media & telecom (largely due to sizable Yahoo and Apple stakes).


- Their credit exposure remains somewhat unchanged from last month at 29.3% net long (37.8% long and -8.5% short).  Their largest exposure there continues to be asset backed securities.


Third Point's Top 5 Positions as of the end of July:

1. Yahoo! (YHOO)
2. Gold
3. Apple (AAPL)
4. Delphi (DLPH)
5. Kraft Foods (KFT)


Third Point's just-released Q2 letter details why Dan Loeb still owns Delphi, among other position updates.  We've also flagged how Loeb recently added to his Yahoo stake.

Leon Cooperman on Bonds, Stocks, and Apple vs. Research in Motion

Leon Cooperman of hedge fund firm Omega Advisors yesterday sat down with Bloomberg Television to talk about the markets, his portfolio, and what he likes/dislikes at this juncture.

On Treasuries:

Cooperman said that, "I have great confidence the Fed is ultimately going to get their way. The Fed is trying to elevate asset prices, help consumption, help the economy and in two-three years time, we will be worrying about inflation and interest rates will be materially higher. An instrument that I have absolutely no interest in - the most widely traded instrument in the world - is US government bonds. I don’t think people understand how risky a US government bond is at 2% return."

On Equities:

After bashing government bonds, Cooperman also examined the potential of investing in high yield bonds but dismissed them as fully priced. So he turned to equities and said that, "the S&P, which is 13 ½ earnings, yields a bit over 2%, 10% below the historical multiple at a time when interest rates are below historical and you can find lots of cheap stocks out there that will yield more than bonds today that are good companies that will grow over time."

This is largely in line with what the hedgie has been preaching for sometime now. We've highlighted in the past his trademark phrase that equities are the best house in the financial asset neighborhood.

On Apple (AAPL) versus Research in Motion (RIMM):

The Omega Advisors founder thinks Apple (AAPL) is worth north of $600. On Research in Motion (RIMM), he notes that, "It's funny, it was really like a mass hysteria. We put about a half of one percent of our assets into RIM late last year on a theory that they had a revenue base that was being mispriced by the market. Which was 20% of what we had in Apple, we've owned Apple now for a long time, and we continue to own a big position, so we had five times more Apple investment than RIM."

He says they sold RIMM due to stop loss discipline, but he admits that it's still intriguing. David Einhorn's hedge fund Greenlight Capital recently bought shares of RIMM, as highlighted in this free excerpt from our newsletter.

Cooperman also mentioned that he likes gold, Qualcomm (QCOM), JPMorgan (JPM), Bank of America (BAC), Altisource Portfolio Solutions (ASPS), Unitedhealthcare (UNH), WellPoint (WLP), Boston Scientific (BSX), Echostar (SATS), and Dish Network (DISH).

Embedded below is the video from Cooperman's interview with Bloomberg TV:



For more from this hedgie, you can view Cooperman's presentation on risks to the equity outlook.

Jeff Saut Expects Near-Term Pullback, Sees It As Buying Opportunity

It's been a while since we checked in on Jeff Saut, Chief Investment Strategist at Raymond James, so let's dive into his latest market commentary. Over the past few weeks, Saut has started to advocate a neutral/cautionary stance, pointing to various near-term overbought signals in the market. Saut now feels that stocks are "searching for some kind of trading peak between now and the FOMC meeting."

The market strategist believes that the Fed will announce quantitative easing round two and that the Republicans will take back the House. While these should be stock-market friendly events, he feels that they could already be discounted. That said, Saut also highlights that portfolio manager anxiety could possibly build amongst those who are materially underweight equities. If stocks were to take off, there would seemingly be a wave of new money behind it as performance anxiety sets in.

On any upcoming pullback, Saut presents the following list of stocks to look into as they've recently beaten earnings estimates and guided higher for the next quarter: Polaris Industries (PII), Select Comfort (SCSS), Stanley Black & Decker (SWK), Tempur-Pedic (TPX), Chubb (CB), UnitedHealth Group (UNH), and Altera (ALTR), the last of which was named as an analyst best pick for 2010 and is up over 33% year-to-date.

Specific sectors that tickle Saut's fancy include technology and energy. At the Value Investing Congress, Lee Ainslie of Maverick Capital said technology stocks are cheap. Overall though, Saut is cautious in the near-term as he points many technical indicators signaling a near-term top. While he feels a dip will occur in the next few weeks, he thinks it is a buying opportunity.

Lastly, the market strategist offers bank loans as an enticing place to park some cash as per recommendations from numerous respected portfolio managers. At the Value Investing Congress, Harch Capital's Michael Lewitt also advocated bank loans as an attractive investment. Saut offers the Pioneer Floating Rate Fund (FLYRX) and the Mainstay Floating Rate Fund (MXFAX) as ways to play this.

Embedded below is the latest market commentary and investment strategy from Jeff Saut:



You can download a .pdf copy here.

For more insight from the strategist, head to Saut's risk management principles as well as his outline of the businessman's risk portfolio.