BOSTON, Jan 21 (Reuters) - Hedge fund manager Daniel Loeb’s Third Point took a new position in T-Mobile US Inc late last year, identifying it as one of several companies in his fund that might benefit from a pickup in global mergers and acquisitions.
“In addition to T-Mobile’s fundamental value proposition, the company is strategically interesting for Sprint and potentially DISH, which has driven shares higher,” Loeb wrote in a quarterly letter, which was seen by Reuters.
The biggest news in the letter centered on Third Point’s new position in Dow Chemical Co. where the fund is urging the company to split its specialty chemicals operation from its petrochemicals business.
But Loeb also wrote of investments in addition to T-Mobile and Dow, including ones in Japan’s Sony and Softbank Corp. In November, Loeb disclosed a $1 billion bet on Softbank, the parent company of Sprint.
“More recently, Sprint has surfaced as a source of meaningful upside potential in the context of a rumored merger proposal for T-Mobile,” Loeb wrote in the letter.
Loeb said gains last year, when his flagship fund rose 25.2 percent, were largely driven by technology, media and telecommunications stocks, adding that he expects to see more gains this year in his current core investments: Softbank, Sony and T-Mobile.
Investment positions at Loeb’s $14 billion Third Point are closely watched, in part because he is known for his frank talk to the corporate world and a history of shaking up management, as he did at Yahoo.
Improving global economic conditions, for example, should also help and Loeb sounded a more optimistic note on earnings, saying, “We expect earnings to rise modestly and the economy overall to surprise to the upside,” compared with Wall Street’s more pessimistic forecasts.
Loeb, who made a big bet on Japan last year, said the “Japan portfolio” disappointed later in the year because Sony underperformed. But he said he remains optimistic for this year, noting that he expects Japan to be a “high-beta trade.”
Loeb also said that he added shares of biotechnology company Intrexon Corp, where the fund first invested in a private funding round in 2011; that company went public in August. “Most attractive to us is Intrexon’s potential to transform multiple industries, including the health, food, and energy markets,” he wrote.
The fund also owns a stake in Ally Financial, noting that it is confident of Chief Executive Mike Carpenter’s ability to guide the company through a restructuring.