Dan Loeb’s Third Point took a 1.6 million-share stake in BlackRock Inc and reinitiated a stake in Alibaba Group Holding of 4.5 million shares during the second quarter ended June 30, according to regulatory filings late on Friday.
In its letter last month to investors, Third Point called BlackRock an “asset-gathering machine,” with organic net inflows of over 70 percent annualized.
Yet we see BlackRock as far more than an asset manager dependent on market movements. It is increasingly becoming a network or index-like business, with earnings power driven by ETFs (via iShares) and data & analytic services (via Aladdin),” Third Point said.
“These are oligopoly businesses with faster growth and much higher incremental margins than traditional asset management – and thus deserve much higher P/E multiples over time.”
Third Point, which earned 4.6 percent in its Offshore Fund during the second quarter, bringing total returns for the year to 10.7 percent, also reinitiated an investment in Alibaba. The firm has owned Alibaba shares directly and via its positions in Yahoo and Softbank over the past six years.
In its second quarter letter, Third Point said Alibaba has consistently surpassed its growth estimates for gross merchandise value, revenue, and earnings and currently, the company has achieved scale.
“Alibaba is currently at a positive inflection point after rolling out significant changes over the past year to its advertising platform, which currently generates the majority of the company’s revenue,” Third Point said. “We view these changes as an important catalyst for meaningful revenue acceleration over the next few years. Combined with an attractive multiple, we believe now is the time to own Alibaba again.”
During the second quarter, Third Point also dissolved its share stake in Snap Inc , Salesforce.com Inc and Qualcomm Inc .
The quarterly disclosures of asset manager stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, offer clues on what big investors are selling and buying, but give no indication of their current stakes.
Frontpage December 17, 2019