Loeb’s Third Point Makes Big Bet on Caesars, Buys One Million Shares

Posted on: November 14, 2020, 06:28h. 

Last updated on: November 15, 2020, 11:17h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Count Third Point LLC among the hedge funds embracing Caesars Entertainment (NASDAQ:CZR). The New York-based money manager added one million shares of the gaming giant during the third quarter in a position valued at $56.06 million, according to a Form 13F filing with the Securities and Exchange Commission (SEC) released Friday.

Dan Loeb
Third Point founder Dan Loeb at the SALT Conference. His hedge fund added a stake in Caesars. (Image: Reuters)

Third Point, founded in 1995 by Daniel Loeb, is one of an array of hedge funds that own positions in Caesars, some of which owned the old version of the casino operator, and some of which previously held stakes in Eldorado Resorts, the company that acquired Caesars for $17.3 billion earlier this year.

Third Point employs an event-driven, value-oriented investment style. The Firm seeks to identify situations where we anticipate a catalyst will unlock value,” according to the firm.

Carl Icahn’s Icahn Enterprises, which was one of the architects of the Caesars/Eldorado merger, no longer owns a position in the gaming company, according to its latest 13F. CEO Keith Cozza departed from the casino firm’s board in July.

Caesars is one of two new positions added by Loeb’s Third Point in the September quarter, with the other being a stake of 84.9 million shares in PG&E (NYSE:PCG), the embattled California electric utility.

Unusual Choice for Third Point

While gaming stocks are hedge fund favorites, Third Point, which has approximately $17 billion in assets under management, isn’t a frequent investor in the industry.

The aforementioned 13F reveals more than 40 positions as of Sept. 30, with Caesars being the only one with casino gaming exposure. Still, the one million shares are enough to put Loeb’s firm in a tie for ninth with Caas Capital Management among the largest Caesars investors. BlackRock is the biggest at 20.41 million shares, according to Guru Focus data.

Based on value at the time of addition and number of shares, Caesars was one of Third Point’s smaller equity investments at the end of the third quarter.

Immediate Payoff

The 13F filing doesn’t indicate exactly when the hedge fund purchased Caesars stock. But based on the million shares being valued at just over $56 million, it’s clear the position is already profitable for Loeb’s firm, because the stock closed at $61.38 on Nov. 13.

While Caesars isn’t the biggest position in the hedge fund’s portfolio, it’s clear the gaming equity played a role in boosting the firm’s returns. Owing to the coronavirus pandemic, Third Point’s 2020 got off to one of its worst starts to a year since its founding in 1995.

However, Loeb told clients in September that thanks to a strong showing in August, all of the year-to-date losses were erased.

Loeb isn’t shying away from adding names adversely affected by the pandemic. In addition to the new stake in Caesars, Third Point recently added shares of Walt Disney (NYSE:DIS), another smart move on Loeb’s part, because that stock is higher by 8.64 percent over the past month.