market folly

Daniel Loeb's hedge fund firm Third Point is out with its first quarter letter to investors.  In it,they detail their position in Dow Chemical (DOW) in-depth.  Instead of summarizing it, we'll let you read the full pitch in the letter below.  They also touch on a Japanese midcap: IHI Corp.

Additionally, Third Point updates its stake on Softbank.  They feel the decline in shares this year was unwarranted and write,

"SoftBank is witnessing substantial growth in underlying asset value, de-levering via the Yahoo! Japan transaction, and poised to drive further de-levering and free cash flow growth in SoftBank Mobile.  It currently trades at a 23% NAV discount to consensus estimates of value.  Alternatively, valuing SoftBank Mobile on a P/FCF methodology suggests SoftBank is trading at a 45% discount.  The discrepancy lies in the fact that the EV/EBITDA approach understates SoftBank Mobile's high free cash flow conversion and low cost of capital.  These discounts are clearly unwarranted.  We anticipate SoftBank's NAV will post continued growth and shrink this discount as management's strategy comes into further focus and transparency around underlying assets (particularly Alibaba) improves."

Embedded below is Third Point's Q1 letter:




You can download a .pdf copy here.