BOSTON (Reuters) - Billionaire investor Daniel Loeb’s hedge fund Third Point LLC bought a stake in Dover Corp during the third quarter and is urging the industrial conglomerate to sell off its energy business among other things.
If the company heeds the hedge fund’s advice, “we believe there is significant additional upside in the investment,” Third Point wrote in a letter to clients, seen by Reuters. The fund is talking to management and wants the company to divest its energy business, allocate capital more efficiently and address its “under earning in its core industrial portfolio.”
The hedge fund also gave high marks to Nestle CEO Mark Schneider for setting specific margin targets and agreeing to sell certain assets. Third Point made a $3.5 billion investment in Nestle in June, less than half a year after Schneider in January became Nestle’s first outside CEO in decades.
“We are pleased with the overall shift in tone,” at the company, Third Point said in its letter. Schneider recently set out plans to reach a 17.5 percent to 18.5 percent margin target and the company plans to buy back $21 billion worth of stock.
Third Point, which manages roughly $16 billion for clients, returned 14.5 percent in the first nine months of the year. It expects earnings at U.S. companies to remain solid. It has cut back its credit portfolio since the start of 2016 at a time its analysts don’t see any “deep weakness in any area or geography.”
Reporting by Svea Herbst-Bayliss; Editing by Chizu Nomiyama and Phil Berlowitz