Loeb takes stake in Nokia, to return cash to investors
BOSTON (Reuters) - Billionaire investor Daniel Loeb has taken a position in Nokia (NOK1V.HE), saying the Finnish communications and technology company is currently inexpensive and is poised to return a lot of cash to investors.
Loeb disclosed the stake in his Third Quarter Investor Letter, which was seen by Reuters. News of Loeb's buy sent Nokia shares up 2.8 percent in New York on Tuesday.
"At our purchase price, we seized an opportunity to create new Nokia at a substantial discount to target value," Loeb wrote in the letter.
The hedge fund manager, whose $14 billion hedge fund Third Point LLC ranks among the industry's best performers, said he acquired the stake after news early last month that Nokia was selling its phone business to Microsoft Corp (MSFT.O).
Loeb, known for his sharp criticism of many corporate chief executives, praised Nokia's leaders, saying their past actions, including the commitment to return capital to investors and the smart price they paid for an acquisition, suggest they will allocate capital wisely.
He said "new" Nokia, which will consist of Nokia Siemens Networks, the HERE maps business and a patent portfolio called Advanced Technologies, will have 8 billion euros in net cash when the deal with Microsoft closes. He expects a "meaningful portion of the excess" to be returned to investors.
Loeb, whose go-anywhere investment strategy has helped his Third Point Offshore Fund return 18 percent this year, while the Standard & Poor's 500 index has gained 19.8 percent, said there have been more event-driven situations recently, giving him good choices for his portfolio.
Among event-driven moves, there may be more to come from Nokia. Reuters reported last month that the company was discussing whether to approach French rival Alcatel-Lucent (ALUA.PA) about a possible tie-up.
Loeb said nothing in the letter about auction house Sotheby's (BID.N), where he has called for a management shake-up.
A big macro bet on Japan has boosted returns "significantly" this year, Loeb wrote, adding that Japanese Prime Minister Shinzo Abe, whose policies to boost growth have resonated with Loeb, has the best opportunity in more than a generation to push the country forward.
He also said his funds have found "compelling new pockets of value in both corporate and structured credit," including what remained of the Canadian market for asset-backed commercial paper after the financial crisis.
In the letter, Loeb said his fund was as large as he wanted it to be right now and that he would be returning to investors 10 percent of the capital in the fund at the end of the year. A final number will be based on year-end account balances, he said, including any redemption requests made by October 31.
Loeb was not immediately available for comment.
Loeb's funds have been hugely popular with wealthy private investors as well as state pensions, including Rhode Island, for thanks to his strong returns. But Loeb was among the first in the industry to curtail new flows, expressing concern that more assets were not necessarily better. He said his fund has grown largely because of a net annualized gain of 24 percent since January 2009. He has been closed to new inflows since the middle of 2011, and now he has decided to return to investors a portion of this year's gains.
Other prominent investors, including Seth Klarman at Baupost Group and Jon Jacobson at Highfields, are also returning some money to clients. (Reporting by Svea Herbst-Bayliss; Editing by John Wallace)
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