Loeb Sees ‘Attractive Valuations’

May 2 2014 | 2:11pm ET

April has turned to May, but Third Point’s Daniel Loeb is in no mood to sell and go away.

Loeb told his investors that he’d be ignoring the old market maxim this year, noting that the recent pullback in stock prices had made equities attractive.

The activist said that he was too optimistic earlier this year, with some sectors “clearly exhibiting bubblelicious valuations.” But prices have come back down to “attractive levels,” although it isn’t exactly shooting fish in a barrel.

“Four months into 2014, it now seems evident that investment performance will require a combination of good stock selection, patience and deft trading,” Loeb wrote.

Loeb’s performance in the first quarter was not bad, in spite of his premature enthusiasm. Third Point’s flagship returned 3.5% on the quarter, with Dow Chemical Co. among its best performers. But that hasn’t inclined Loeb any more kindly towards the company, which he says should spin-off its petrochemical business.

Dow rejected that proposal in February, but Loeb is undeterred: “Management needs to focus on what is driving this underperformance and how to cure it,” he wrote. “Dow’s integrated strategy does not maximize profits.”

But Loeb was also unusually generous towards a company that has spurned him, saying that Dow’s “level of shareholder engagement has also risen notably, demonstrating an admirable and strong commitment to addressing long-standing concerns.”


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Nicky Hilton To Wed James Rothschild

Aug 20 2014 | 5:23am ET

When it comes to husband-material, socialite Nicky Hilton is sticking with finance...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note