Dan Loeb is looking out at the market and seeing coffee and bacon as the keys to keeping him in the billionaire boys club.
In his Q2 investor letter, via Dealbreaker, the hedge fund manager informed his Third Point investors that he is bullish on Sara Lee, a company best known for its baked goods, and highlights it as one of his fund’s “Select Portfolio Positions,” or key investment strategies that have helped push the $7.1 billion firm to YTD returns of 6.8%, despite negative returns of -1.6% in the last quarter.
Seduced by Sara Lee
Third Point added to its Sara Lee holding in the second quarter.
According to Loeb, Sara Lee not only has very strong performance in its meat and coffee businesses, but it also feeds off of its own ability to cut costs while keeping its assets diversified through both acquisition and divestment. These abilities have, according to Loeb, made it ripe for further investment and takeover, especially under the guidance of its new Chairman, Jan Bennink.
Loeb is effusive in his praise of Bennink, saying he is “acting like a CEO” and possesses a track record of management from his time leading the baby food conglomerate Numico, a company that he sold to Danone for $17 billion in 2007 . That ability to pose a company for takeover leads Loeb to say straight out that, under Bennink, Sara Lee’s coffee business could be “Numico all over again.”
So count Dan Loeb amongst the legion who prove the rule that “nobody doesn’t like Sara Lee.”
The rest of the portfolio
Because of volatility in Europe and the U.S, Loeb says he’s playing the market cautiously going forward, and reduced net exposures through Q2.
The big winners last quarter for Third Point included El Paso, ABS Index Short 1, Delphi, ABC Index Short 2, and Gold. Barrick Gold was a big loser.