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Holly LaFon
Holly LaFon
Articles (7842) 

Daniel Loeb Buys 8 Stocks in 2nd Quarter

Third Point investor made BlackRock and Alibaba two of largest holdings

Daniel Loeb (Trades, Portfolio), the founder of Third Point hedge fund, shared on Tuesday that he loaded eight new stocks into his portfolio in the second quarter, bringing the total to 32, with 24% turnover.

Loeb’s Offshore Fund, which the activist investors labels as “opportunistic value investing,” has roughly doubled the index since its 1995 inception, returning 15.8% versus 7.9% in the S&P 500. Two of the stocks he added during the second quarter made it to his top-five holdings, BlackRock Inc. (NYSE:BLK) at three and Alibaba Group Holding (BABA) at four.

The smaller positions he added spanned NXP Semiconductors NV (NASDAQ:NXPI) Vulcan Materials Co. (NYSE:VMC), Alexion Pharmaceuticals Inc. (NASDAQ:ALXN), FMC Corp. (NYSE:FMC), BanCo. Macro SA (NYSE:BMA) and EQT Corp. (NYSE:EQT). In sectors, he made the largest increases in financial services, to 11.7% of his stock portfolio from 8.2% the previous quarter, and in consumer cyclical, which he increased to 14% from 8.4%.

Loeb also increased his undisclosed short positions to -18.9% short in his total long-short equity portfolio, with 88% long.

Loeb said he is shorting retailers, consumer brands, energy-related companies and some firms “we think have very low quality earnings that might be playing accounting games, Bloomberg reported on Aug. 3, citing a Third Point conference call.

Loeb gave his outlook for the markets and economy in his second quarter letter:

Looking ahead to the second half of the year, we still believe that central banks will be important drivers of action. While it might be too early to say that the key central banks have turned hawkish, their tone is changing and they are well past the point where any 2 hiccup in the market will prompt increased accommodation. In the US, current weak levels of inflation and poor CPI and retail sales reports present a quandary for the Fed. Based on her recent remarks, Janet Yellen does not seem likely to advocate drastic action. However, we do believe that the Fed will begin balance sheet reduction shortly but that the next rate hike will be on hold until growth and inflation accelerate.

Overview of Loeb’s latest second-quarter holdings:

Loeb bought 1.55 million shares of BlackRock Inc. (NYSE:BLK), which traded for $399 per share on average during the quarter. He gave the holding 5.8% of his long stock portfolio.

Blackrock Inc. has a market cap of $69.18 billion; its shares were traded around $426.90 with a P/E ratio of 20.50 and P/S ratio of 6.14. The trailing 12-month dividend yield of Blackrock Inc. stocks is 2.25%. The forward dividend yield of Blackrock Inc. stocks is 2.34%. Blackrock Inc. had an annual average earnings growth of 14.10% over the past 10 years. GuruFocus rated Blackrock Inc. the business predictability rank of 4-star.

Loeb bought 4.5 million shares of Alibaba Group Holdings (BABA), which traded for $123 on average during the quarter. He gave the holding 5.6% of the portfolio.

Alibaba Group Holding Ltd. has a market cap of $403.99 billion; its shares were traded around $159.72 with a P/E ratio of 64.17 and P/S ratio of 17.63. Alibaba Group Holding Ltd. had an annual average earnings growth of 86.0% over the past 10 years. GuruFocus rated Alibaba Group Holding Ltd. the business predictability rank of 4-star.

Loeb bought 2.7 million shares of NXP Semiconductors NV (NASDAQ:NXPI), which traded for $107 per share on average during the quarter. He gave the holding 2.63% of the long stock portfolio.

NXP Semiconductors NV has a market cap of $38.13 billion; its shares were traded around $112.77 with a P/E ratio of 19.75 and P/S ratio of 4.23. NXP Semiconductors NV had an annual average earnings growth of 15.50% over the past five years.

Loeb bought 1.6 million shares of Vulcan Materials Co. (NYSE:VMC), which traded for $126 per share on average during the quarter. He gave the holding 1.8% of the long stock portfolio.

Vulcan Materials Co. has a market cap of $15.37 billion; its shares were traded around $116.22 with a P/E ratio of 35.64 and P/S ratio of 4.24. The trailing 12-month dividend yield of Vulcan Materials Co. stocks is 0.79%. The forward dividend yield of Vulcan Materials Co. stocks is 0.86%. Vulcan Materials Co. had an annual average earnings growth of 19.30% over the past five years.

Loeb bought 1.25 million shares of Alexion Pharmaceuticals Inc. (NASDAQ:ALXN), which traded for $116 per share on average during the quarter. He gave the holding 1.35% of the long stock portfolio.

Alexion Pharmaceuticals Inc. has a market cap of $30.39 billion; its shares were traded around $136.17 with a P/E ratio of 58.93 and P/S ratio of 9.05. Alexion Pharmaceuticals Inc. had an annual average earnings growth of 26.50% over the past five years.

See Dan Loeb's portfolio here.


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