Hedge Fund Third Point founder Dan Loeb revealed fund’s position in CF Industries and GF shares jumped nearly 12%
Hedge fund Third Point said in a letter to investors that CF Industries, one of the world’s largest agricultural and industrial fertilizer producers, should significantly increase its dividend. Third Point said it took a position in CF Industries because the company’s access to inexpensive natural gas, a key raw material in the production of fertilizer, provides it with a low cost advantage over global rivals.
Shares of CF Industries Holdings Inc. CF +11.77% jumped nearly 12% on Monday after Third Point LLC, the hedge fund run by activist investor Dan Loeb, said it held an unspecified stake in the Illinois supplier of nitrogen and phosphate fertilizers.
Hedge fund hot shot Dan Loeb played a big role in shaking up Internet technology company Yahoo Inc YHOO -0.64% . as an activist shareholder and board member. He pushed for the ouster of former Yahoo Chief Executive Scott Thompson, and for reorganizing the board and hiring new CEO Marissa Mayer. Mr. Last week Loeb said he was leaving Yahoo’s board and unloading the bulk of Third Point’s shares in the company.
Dan Loeb’s activist hedge fund Third Point also took a stake in Sony Corp. 6758.TO -3.56% in May, and has ratcheted up a campaign to persuade the Japanese electronics company to stage an initial public offering of its entertainment unit.
CF Industries calls itself the world’s second-largest nitrogen producer. It has a market capitalization of $12 billion, and last year generated record net income of $1.8 billion on record net sales of $6.1 billion.
Third Point said CF’s access to low-cost North American natural gas gives it “a structural, sustainable” advantage in capturing profit margins “relative to global peers with higher input costs.” The fund’s letter said it believes CF Industries’ “structural cash-flow generation strength is misunderstood and that management should deliver a much larger dividend to its shareholders.”
CF Industries’ shares rose $21.30, or 11.8%, to close at $202.30 in 4 p.m. trading Monday on the New York Stock Exchange NYX +0.24% .
Loeb hired former CIA agents to teach him and his Third Point staff “deception detection.” That’s basically lie detection for corporate executives.