Nestle’s stock price is getting a huge boost from an activist hedge fund.
Daniel Loeb, famous for being a successful activist investor in companies like Yahoo and Sony, has set his sights on the consumer conglomerate Nestle.
Loeb’s hedge fund, Third Point, released a note Sunday disclosing its share in Nestle. The fund currently owns roughly 40 million shares, worth about $3.5 billion.
“The category and geographic mix of [Nestle’s] portfolio is excellent and offers the company a long runway for growth as emerging market customers increase consumption and developed market consumers trade up,” the fund wrote in its letter.
“However, despite having arguably the best positioned portfolio in the consumer packaged goods industry, Nestlé shares have significantly underperformed most of their US and European consumer staples peers on a three year, five year, and ten year total shareholder return basis,” it added.
Nestle jumped nearly 5% on the news of Third Point’s holding. The announcement also gave a boost to L’Oreal, which Nestle owns a 23% stake in.
One of Third Point’s ideas for improving Nestle’s financials involves selling the large stake in L’Oreal. Third Point called the investment in L’Oreal “superb” but said that it was time to sell. Nestle’s stake in the company is worth about $24 billion, or 10% of Nestle’s market cap.
L’Oreal was up 4.5% on Monday and is currently trading at 196.10 EUR.
Nestle is up 17.88% this year including Monday’s move. L’Oreal is up 12.65% including Monday’s move.
- Markets Insider