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Dan Loeb Has Something Nice To Say But…

Actually, make that “buts.” Lots of them.
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Third Point LLC

Third Point LLC

Dan Loeb’s feeling pretty good. He managed to just about match the S&P 500’s return last year, something very few of his peers—if you can call them that—can claim. And he is super psyched to start shorting the hell out of everything this year.

The firm sees "abundant opportunity" to bet against companies this year and beyond, after a prolonged period of low interest rates that has likely created excess capacity across many industries and that will have “unintended consequences for companies’ pricing power and margins.”

Suffice is to say, Danny Boy’s in a good mood. That or he’s been replaced by an impostor. There’s no other explanation for this:

"These actions are important steps in the right direction that make it clear that Nestlé is responding to calls for action," Loeb’s Third Point said in a letter to investors Monday.

On the other hand, if you detect an unwritten but very emphatic “but” appended to that statement, you might suspect that Loeb isn’t being held captive in an undisclosed location without poison pen or paper, after all. He’s just buttering up CEO Mark Schneider with 21 words, before expending many more words demonstrating the sugar fiend’s impatience.

"While we recognize that Nestlé has certain unique cultural and structural constraints, we hope now that Dr. Schneider has completed his first year and there is new blood on the board, the company is able to move with greater alacrity."

On what, exactly? Why, selling the company’s 44-year-old stake in L’Oreal, ditching its ice cream and frozen pizza businesses, ceasing its “confusing” acquisitions in the consumer health care space, and also more buybacks. Lots more buybacks. Now now now, before the rush from the last ones wears off.

"Shares remain attractively priced relative to what the company could earn in 2020 and beyond. If management is as confident as we are in its ability to execute, then it should move quickly to retire shares now."

Loeb’s Third Point Calls for Faster Changes at Nestle in Letter [Bloomberg]


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