Herbalife isn't Dan Loeb's Only Stock; ETFs for Third Point
Third Point Capital founder Dan Loeb has been getting plenty of press these days. After taking an 8.2 percent stake in controversial and embattled Herbalife (NYSE: HLF ), three percent of Third Point's $10.1 billion in investor cash is now devoted to a long bet on a company that some investors think is no more than a multi-level marketing pyramid scheme.
"Some" includes Pershing Square's Bill Ackman. Pershing Square is short more than $1 billion worth of Herbalife shares, according to the Wall Street Journal. This is not the first time Ackman and Loeb have tussled. Loeb was previously short J.C. Penney (NYSE: JCP ) via put options while Ackman was long the stock.
Rivalries and theatrics aside, Third Point is involved with an array of other positions besides Herbalife. In some cases, Third Point owns several stocks from the same sector, meaning investors can in fact use some ETFs to be like Dan Loeb. The list starts with...
SPDR Gold Shares (NYSE: GLD ) Like so many other hedge fund luminaries, including George Soros, John Paulson and David Einhorn, Loeb is bullish, at least somewhat, on gold. Third Point owned 130,000 shares of GLD at the end of the third quarter, but it should be noted that amount puts the ETF in bottom half of the hedge fund's equity holdings in terms of the sizes of the stakes. Not to mention, Loeb pared his GLD stake a bit during the quarter.
SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP ) Third Point owns stakes in several energy stocks, including Cabot Oil & Gas (NYSE: COG ), Chesapeake Energy (NYSE: CHK ) and Murphy Oil (NYSE: MUR ). Murphy, which is looking to spin-off its downstream operations later this year, is one of Third Point's more significant positions. The stock represents the hedge fund's fifth-largest holding at 5.14 percent of the total portfolio.
Chesapeake, Cabot and Murphy, in that order, all appear in XOP, though investors should note XOP is essentially an equal-weight ETF and none of its 73 holdings receives an allocation of more than 1.64 percent.
iShares Dow Jones U.S. Healthcare Providers Index Fund (NYSE: IHF ) The iShares Dow Jones U.S. Healthcare Providers Index Fund represents perhaps the best ETF avenue for investors looking to do their best Dan Loeb impressions because Third Point really likes health insurance names.
Although the hedge fund no long owns shares of Aetna (NYSE: AET ) and Humana (NYSE: HUM ) and has reduced its stake in Cigna (NYSE: CI ), Third Point still maintains positions in Dow component UnitedHealth (NYSE: UNH ) and WellPoint (NYSE: WLP ). Those three stocks combine for about 26 percent of IHF's weight. Over the past six months, IHF has proven to be a much better bet than WellPoint and UnitedHealth.
PowerShares Dynamic Insurance Portfolio (NYSE: PIC ) PIC may not be the most well-known insurance ETF on the market, but like IHF, it is one of the better ways to mimic Loeb's moves. According to filing data, Third Point has owned call options on MetLife (NYSE: MET ). Additionally, American International Group (NYSE: AIG ), represented over 15 percent of Third Point's portfolio at the end of the third quarter.
Those two stocks combine for over 10 percent of PIC's weight. PIC has slightly outpaced AIG, but lagged MetLife over the past six months.
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