It is interesting to follow the purchases and recommendations of investors. But it's even more interesting to follow their sales and warnings about stocks that they think could currently hurt your portfolio. The legendary Dan Loeb has pointed to several of these!

Daniel Loeb is the CEO and Chief Investment Officer of Third Point LLC, a hedge fund founded in 1995. With an estimated net worth of $4.2 billion and three decades of investment experience under his belt, Dan Loeb is known for launching activist campaigns against corporate boards in various industries and countries. Such a militant version of Icahn 😁

His experience is varied - even if we leave out his own hedge fund. In fact, he has served on the boards of five publicly traded companies: Ligand Pharmaceuticals, POGO Producing Co, Massey Energy, Yahoo! and Sotheby's.

How does Loeb invest, what are his results?

Loeb is a big fan of activist investing. Third Point then applies an event-driven, value-oriented investment style, trying to identify situations that could catalyze growth. The hedge fund had $13.9 billion in assets under management at the end of the month . Third Point's activist investment approach has produced good results in the past. Its flagship product, the Third Point Offshore Fund, has returned 13.7% annually since its inception in December 1996. Well say... who among you has that? 😛

Is it leaking into Loeb and the fund's shoes?

Third Point's portfolio is quite large and broadly diversified by most investors' standards. It contained (until recently) 79 positions. But in the last quarter, there was a real carnage in the portfolio. Loeb reduced exposure to 35 positions and got rid of 21 positions entirely.

Loeb justified the sale of most of them as follows:

In the second quarter, we significantly reduced risk and took steps to protect capital in a turbulent market with an uncertain economic environment driven by inflationary pressures, the prospect of significant interest rate increases, geopolitical instability, supply chain disruptions, a likely recession in Europe and a possible recession in the domestic market.

While shorting served us well in April and May given the sharply declining market, our investments in energy and commodities turned against us in June. We also experienced mark-to-market losses on structured credit and write-downs in our private securities portfolio.

Not unexpectedly, the same positioning that protected us from losses in April and May hurt our ability to recover from the July market move. Earlier this month, the inflationary fever appeared to be breaking, led by a downward move in oil and some commodity prices, which in turn led to a positive shift in our expectations for the resilience of consumer and industrial spending.

Loeb's letter to investors. Source

So Loeb was a bit taken aback by the market developments and admits that mistakes were made that caused the portfolio to suffer. But investors should expect these fluctuations. Given his past performance, the money is clearly in good hands. We are interested, however, in the specific reasons that led Loeb and Third Point to sell a few specific (and pretty sound names). So which ones did he get rid of?

One of the biggest positions Loeb has closed is Intuit $INTU+1.1%. A global financial technology platform that allows consumers and small businesses to manage their finances, acquire and retain customers, save money, pay down debt, and easily pay taxes, among other things.

Loeb and his Third Point held 725,000 shares of the company until recently. But now he has abandoned his entire position. Even so, it seems he was too late to divest his investment. The company enjoyed its greatest glory around Christmas last year. But despite a 30% decline, the company is still selling at an insane P/E. In general, Loeb divested to protect a portfolio of expensive technology and fintech stocks. Like many other investors - because of fear and uncertainty in the market. In general, expensive tech stocks are not currently having a bed of roses.

Another title that Loeb sent overboard is exactly such a case - Rivian $RIVN-0.2%. Perhaps no company in the market has experienced such initial hype and such a painful fall as this particular American electric car maker.

The company has so far launched three vehicles to great acclaim - the R1T and R1S, and the EDV - an electric van custom-designed for Amazon. Dan Loeb's Third Point exited its entire position in Q2 2022. Perhaps a good thing. Because moments later, the company announced its Q3 2022 production results. The company produced just 7,363 vehicles and delivered 6,584 in that period. But at least it's meeting its original plan of 25,000 vehicles.

The fund has probably run out of patience here. On the other hand, the investment could not fall much lower.

What is a little surprising, however, is the flight from the energy sector, which, on the contrary, is now believed and celebrated by most well-known names. Suncor Energy $SU+0.1% is an energy company that is engaged in the production and treatment of oil and gas onshore and offshore, refining crude oil in Canada and the United States, and operating a retail and wholesale distribution network. The fund again exited the entire position.

https://www.youtube.com/watch?v=mz98PzkDYuw

By far the most surprising name and the largest company the fund divested from is Microsoft $MSFT+1.6%. The fund held 22,500,000 shares of Microsoft in Q1. During Q1 2022, this hedge fund reduced its holding by 69% compared to the previous quarter and then divested the remaining shares as well.

This divestment remained without justification. This is somewhat strange, as Microsoft is quite popular among experts.

Other companies and notable names that the billionaire-led fund divested from are The Mosaic Company $MOS+0.9% Zendesk $ZEN+0.0% and IQVIA Holdings $IQV+3.2%

https://www.youtube.com/watch?v=9QweTNq2tOM

What about you? Do you own any of these companies? If so - are you divesting your position?

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Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and a few other analyses. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.