Third Point, LLC was active during the fourth quarter of 2018, that’s for sure. The hedge fund run by famed investor Daniel Loeb liquidated some large holdings during the quarter in some rather well-known stocks. However, what appears to be just as impressive is the companies the hedge fund decided to buy, or the lack thereof. It would suggest the fund may be hoarding quite a bit of cash, waiting to deploy.
Throughout the quarter, the hedge fund sold their $1.2 billion holdings of United Technologies Corp. (UTX), a $666 million position in Alibaba Group Holding Limited (BABA), and a $470 million position in Microsoft Corp. (MSFT). While it isn’t clear why the firm sold Microsoft, it is obvious why they sold United Technologies and Alibaba, to cut exposure to China and a slowing economy. The total value of those three stocks at the end of the third quarter was over $2.2 billion.
The hedge fund also cut nearly a quarter of its stakes in Baxter International Inc. (BAX), DowDuPont Inc. (DWDP) and Constellation Brands Inc. (STZ). Additionally, the fund sold about 40% of their position in the American Express Co. (AXP) and over 50% of its stake in PayPal Holdings Inc. (PYPL). In total, Third Point sold out of 10 stocks and reduced their holdings in 12.
Not Many Purchases
More interesting is that the firm only made one new purchase while adding to 4 existing holdings. One of the stocks that Lone Pine Third Point upped their stake in was Campbell Soup Co. (CPB). An interesting choice, considering the stock has fallen 39% over the past three years. It is also apparent that hedge funds saw the opportunity to profit. The hedge fund was pushing for the company to restructure or put itself up for sale.
The newest position added to the portfolio was in Cigna Co., and about $109 million worth. This is a small amount for the fund and is likely the start of something that may continue to grow.
With all the sells, reductions in positions and the lack of purchases, the fund was apparently in a period of moving to the sidelines. It appears to have been a smart decision given the stock market’s volatility.
However, what may be more interesting is learning where all those extra dollars turns up. There is a good chance we made need to wait until next quarter to find out the answer. Then again, it will be important to keep an eye on those 13G’s, as it seems highly likely that a sizeable new position is bound to show up eventually.