Third Point is a New York-based investment company founded by Loeb in 1995. The activist investor tries to identify and promote situations that have a positive impact on the company’s shares and thus create value for the shareholders. More than 50% of the company’s positions are activist positions, since activism has brought more profits to the third point since 2011.
At the end of the quarter, the equity portfolio was valued at $ 8.42 billion.
In line with the investment criteria mentioned above, the company did three transactions in the quarter, which influenced the equity portfolio by more than 3%. The company sold its positions in Sotheby’s (NYSE: BID) and PayPal Holdings Inc. (NASDAQ: PYPL) and established a new stake in IAA Inc. (NYSE: IAA).
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Loeb sold the company’s 6,661,604 equity position in Sotheby’s, the sixth largest holding in the previous quarter. Trading influenced the equity portfolio by -4.51%. The shares traded at an average price of $ 56.99 each in the quarter.
Sothebys is one of the world’s largest brokers for luxury real estate, art, jewelry and collectibles. The British-American multinational auction company is headquartered in New York City.
On February 14, Sotheby’s shares traded for $ 56.99 with a market capitalization of $ 2.66 billion and a price-earnings ratio of 25.67. According to the Peter Lynch chart, the stock is clearly overvalued.
Sothebys has a GuruFocus financial strength rating of 4 out of 10; The interest coverage of 4.18% and the Altman Z value of 1.8 are below 67.43% of the competitors. The company has seen strong sales and net profit growth in recent years and, according to the National Association of Realtors, is expected to see stable price valuations for its property assets over the next two years.
GuruFocus calculations assume that Sotheby’s position has made a 36.12% gain since the company first bought shares in the first quarter of 2013.
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The activist investor also left 2,700,000 shares in Paypal, which affected the equity portfolio by -3.32%. During the quarter, shares traded at an average price of $ 104.36 each.
PayPal is a global online payment system operator that increases the flexibility, accessibility and security of various methods of electronic transactions.
On February 14, PayPal shares traded for $ 120.51 with a market capitalization of $ 141.35 billion and a price-earnings ratio of $ 58.22. According to the Peter Lynch chart, the share can be traded above its intrinsic value.
GuruFocus assigned PayPal a financial strength of 6 out of 10 and a return on investment of 8 out of 10. Interest coverage of 24.26% is low for the industry, but the Altman Z value of 3.47 indicates that the company is not at risk of bankruptcy. PayPal has seen constant growth in sales and earnings since its initial listing.
According to GuruFocus calculations, PayPal’s position for Third Point has achieved a return of 15.58% since the company first bought shares in the second quarter of 2018.
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Loeb invested in 6,500,000 IAA shares (Insurance Auto Auctions), which had a 3.52% influence on the share portfolio. The shares traded at an average price of $ 42.22 in the quarter.
The IAA sells vehicles and vehicle parts that are slightly damaged, salvaged or unambiguous. It hosts auctions in the U.S. where it sells items ranging from motorcycles and auto parts to heavy construction equipment.
On February 14, shares were traded with a market cap of $ 6.51 billion and a price-earnings ratio of $ 33.65 per $ 48.73.
The company has a GuruFocus financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. Interest coverage is 6.4% at the lower end of the industry, while the Altman Z score of 2.84 is in the gray area.
Since its initial listing in 2019, the company has increased its sales by 10.1% per year and its Ebitda by 13.5% per year. The 22.11% operating margin exceeds 90.15% of the competition.
The IAA is relatively young as a stock listing, as it debuted on the U.S. and German markets for the first time in mid-2019. It is currently in a growth and expansion phase and has visited 10 countries to find the market potential.
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The company’s top positions are Baxter International Inc. (BAX) with 16.83% of the equity portfolio, United Technologies Corp. (UTX) with 8.97% and Campbell Soup Co. (CPB) with 8.18%.
In terms of sector weighting, the company is the largest invested in healthcare, technology and industry.
Disclosure: The author has no shares in the named shares.
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