By Svea Herbst-Bayliss
BOSTON (Reuters) - Pushing companies to perform better has earned Third Point a 300 percent return in the last eight years, the hedge fund told investors in a letter on Thursday, praising management at some of its targets for taking the right steps.
The $14 billion firm, run by Daniel Loeb, lost 11.3 percent in 2018 but said corporate activism, including campaigns it waged at Campbell Soup and Nestle SA (SIX:NESN) last year, will remain a priority in the future.
Shorting, or betting that stocks will drop, as well as opportunistic credit investments and identifying mispriced intrinsic value securities, are other areas where Third Point can compete in a world increasingly dominated by computer driven trading and passive investments like index funds.
Loeb pressed management and boards at several companies over the last year and on Thursday he gave a shout-out to Mark Schneider, CEO of food company Nestle SA, as well as Mark Clouse, the newly appointed CEO of Campbell Soup, who was recruited to the position with Third Point's help.
Eight months after publicly pressuring Nestle for more sales and restructuring, Loeb praised Nestle and Schneider for announcing plans to explore alternatives for its Herta charcuterie business and announcing a strategic review of its skin health business.
"We believe Nestlé can sustain this new momentum beyond 2020, as the company continues to sharpen its strategy, better align its portfolio around key categories, and improve its
organization to become more agile," the letter, seen by Reuters, said. Loeb added "We remain confident in Mr. Schneider’s leadership."
This is the first time Loeb has spoken extensively about Nestle since admonishing the company in July saying "This is a call for urgency -- rather than incrementalism."
The letter also said that Third Point had called on management at United Technologies (NYSE:UTX), where it remains a large owner, to consider a "value-creating transaction" for Carrier, and said "management are receptive to these suggestions."
Third Point, like many other activist investors, lost money last year, ending the year with a 11.3 percent loss. It was only the second double digit decline in its 24 year history, the letter said. The fund said it has made money this year and is well positioned to benefit when volatility picks up and markets sell off anew.