Daniel Loeb (Trades, Portfolio), founder of activist New York hedge fund Third Point, has been amassing a stake in EssilorLuxottica, a stock trading near all-time highs, Reuters reported Sunday citing people familiar with the matter.
Italy’s EssilorLuxottica SA (FRA:ESL, Financial), the world’s largest lenses and glasses manufacturer with a $57.13 billion market cap, also captured the attention of international value investor David Herro (Trades, Portfolio) in recent months. The Oakmark Funds manager acquired 2.15 million shares of the company in the second quarter, making it 0.88% of his Oakmark International Fund equity portfolio.
The stock has soared from an almost four-year low around $96 in the final week of March to a record high around $131.45 Monday.
Loeb, who describes his investing style as “event-driven” and value-oriented, is buying the maker of Ray-Ban sunglasses as it battles to integrate following its merger. The company was created in October when France-based lens maker Essilor united with Italy’s upscale eyewear manufacturer Luxottica Group SpA. The combined company has a market cap of $63.82 billion and had total sales of more than 16 billion in 2017. It had projected annual revenue savings of the range of 200 million to 300 million through the merger.
EssilorLuxottica’s shares spiked following the release of its first-half 2019 results on July 31. The company reported 7.3% year-over-year revenue growth to 8.78 billion euros, with increases across all segments. Net profit rose 6.8% to 1.099 billion, or 1.54 per diluted share. It ended the quarter with 1.54 billion euros in cash, an increase from 986 billion euros at the end of 2018. Net debt stood at 4.73 billion, up from 1.96 billion euros at year-end.
Executive Chairman Lenoardo Del Vecchio also said the company expects for the second half “to deliver further growth and a strong improvement in profitability compared to last year, thanks to the launch of a new generation of products in the market that will allow us to improve the consumer experience.”
For full-year 2019, the company reaffirmed its guidance for sales growth between 3.5% and 5%, with adjusted operating profit growth of 0.8 to 1.2x sales.
In addition to EssilorLuxottica, Loeb is engaged in a slew of activist investments where he is pressing management for change with the aim to unlock shareholder value. The investor has sizable positions in Nestle (OTCPK:NSRGY, Financial), Cambell Soup (CPB, Financial) and Sony (SNE, Financial). Third Point has $14.4 billion in assets under management, and its main fund has returned 15.7% for the year through July, versus a 20.2% rise in the S&P 500 index.
See Daniel Loeb (Trades, Portfolio)'s portfolio here.
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