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Dan Loeb Exited These Positions in the Fourth Quarter

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Dan Loeb’s key exits

According to Third Point’s 13 F filings for the quarter ended in December 2018, the fund exited its positions in United Technologies (UTX), Alibaba (BABA), Microsoft (MSFT), and Netflix (NFLX) during the quarter.

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United Technologies

Dan Loeb bought a substantial position in United Technologies in the fourth quarter of 2017. In its Q1 2018 letter to investors, Third Point told investors that UTC has been underperforming markets due to its “one size fits all” approach. Third Point had approached UTC’s board expressing its concerns regarding the company’s weak performance. Third Point had even suggested breaking up the company into three separate focused businesses. The hedge fund also stated, “Third Point did not invest in UTC for what it is today but for what it could become. We intend to work constructively with the Company to see the portfolio review conclude successfully.”

United Technologies’ split

While initially UTC’s chair and CEO, Gregory Hayes, was hesitant to break up the company three ways due to high costs, he finally announced the split in November 2018. According to CNBC, Hayes said that the decision to split the company came after the board realized that the three businesses could survive on their own. He added, “There was no cross-subsidy required, and that was, I think, the magic moment when the board said that we don’t really need to be together.” UTC rival General Electric (GE) is also splitting up to unlock its full value. United Technologies stock fell by ~17% in 2018, underperforming the broader markets (SPY) (DIA).

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