Why Loeb Cut Exposure to Netflix, Microsoft, and Alibaba in Q4

Third Point cuts tech exposure

In its third-quarter letter to investors, Third Point said that it reduced its “tech exposure meaningfully.” It is probably in keeping in with this theme that the fund further exited its stakes in major tech names including Alibaba (BABA), Microsoft (MFST), and Netflix (NFLX) during the quarter. While NFLX and MSFT gained 33% and 18% during 2018, BABA lost close to a quarter of its value in 2018. The tech-heavy (XLK) NASDAQ Composite (QQQ) lost ~17% in the last quarter of 2018.

Why Loeb Cut Exposure to Netflix, Microsoft, and Alibaba in Q4

Dan Loeb exits Alibaba, Netflix, and Microsoft

Dan Loeb initiated its 4.5 million share bet on Alibaba in Q2 2017. Loeb viewed the changes that Alibaba made to its ad platform as an important catalyst for significant revenue growth over the coming years.

Third Point acquired a new 2 million share stake in Netflix in Q4 2017. During Q3 2018, Dan Loeb cut the firm’s stake in Netflix by ~33%, while he increased the firm’s stake in Microsoft. The fund completely exited Facebook (FB) during the third quarter. The fund initiated a stake in Microsoft in Q1 2018 and kept on adding to the stake for two consecutive quarters only to dissolve the stake in Q4 2018.

Other exits

The fund also exited Marathon Petroleum (MPC) during the latest quarter. Among other exited positions were Lennar (LEN), Deere (DE), Diamondback Energy (FANG), WPX Energy (WPX), and Arco Platform.