As Part Of Dan Loeb’s Third Point Investment Strategy, Disney Stock Is Being Bought Back By The Company
In a statement released Monday, Dan Loeb announced that his hedge fund, Third Point LLC, which liquidated a large stake in Walt Disney Co. earlier this year, has repurchased a “significant stake” in the company.
The activist investor, disclosed the investment in a letter sent to Disney Chief Executive Bob Chapek, in which he praised the growth of Disney’s streaming subscriber base and urged the company to engage with Third Point on a number of governance issues that are urgently needed.
It is the Third Point Group’s goal to push Disney to “make every effort” to gain control over Comcast Corp.’s remaining minority stake in the streaming giant Hulu before the end of its contractual obligations in 2024.
In his letter, Loeb said that he believed it would even be prudent for Disney to pay a modest premium to expedite the integration process. However, he acknowledged that the seller may have an unreasonable price expectation at this time.
In addition, the letter suggests that Disney should spin off its ESPN business to shareholders in order to alleviate the parent company’s leverage in an effort to reduce leverage.
As Part Of Dan Loeb’s Third Point Investment Strategy, Disney Stock Is Being Bought Back By The Company
Even though ESPN is an integral part of the company’s streaming offerings and generates a significant amount of free cash flow, the letter concludes that there is a “strong case to be made.”
It is also stated in Loeb’s letter that the company should institute a cost-cutting program and continue its suspension of cash dividend payments that were instituted during the pandemic era.
It has been reported that Third Point once held 4.1 million shares of Disney and successfully pressured the company to suspend its $3 billion annual dividend and plow the funds instead into its streaming business instead.
By the first quarter of this year, however, the hedge fund had completely exited its position in the stock.
An individual familiar with Mr.Loeb’s thinking told The Wall Street Journal in May that Mr. Loeb had become increasingly concerned that it would take years for the streaming business Disney to reap the profits needed to boost the share price of the company.
As of Monday morning, Disney shares were up 1.9% to $123.76 in early trading.
