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Happy Wednesday, welcome back to Dry Powder.
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The summer is winding down, but there’s few slow days on Wall Street. In today’s column, I explore the odds that Dan Loeb’s nearly billion-dollar investment in Disney will be enough to sway C.E.O. Bob Chapek into adopting a laundry list of changes, from spinning ESPN to reconfiguring its cost structure. Perhaps Chapek, the cold-hearted operator (I use the phrase respectfully), might prove more amenable than his more talent-friendly predecessors.
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Dan Loeb’s Chapek Punch List |
When you cut through it, all Dan Loeb really really wants Bob Chapek to do is slash Disney’s bloated costs and pay down the company’s $50 billion of debt. And maybe shake up the board. And maybe spin ESPN. And, oh wait… |
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Unlike say Warren Buffett or Bill Ackman, investors who like to buy and hold until the pain becomes too acute, Dan Loeb has a reputation for being nimble, and opportunistic. He once told me that investing is simply all about figuring out when to do something that’s obvious, and when to do something that’s contrarian. At the outset of the pandemic, for instance, Loeb made what he deemed to be the obvious decision to invest in Disney, telling me it was a “tremendous company” with “a great brand” and he was very excited about being able to buy the stock at a discount that resulted from the negative impact that the quarantine had on the company’s parks, sports rights, cruise business, and theatrical releases. Loeb’s Third Point hedge fund owned stock in Disney worth more than $900 million at its peak, and then ultimately sold out of the position completely earlier this year. Meanwhile, shares in Disney rose around 70 percent between May 2020, about when he bought the first time, and August 2021, when he disclosed his first Disney stake. He made a killing.
More recently, on August 15th, Loeb disclosed that he had taken another bite of the Disney apple, amassing a roughly $750 million stake in the company. This time, however, his money came with a few requests, which he politely yet forcefully articulated in a letter to Disney C.E.O. Bob Chapek. I’ve known Dan for a long time and have written about his financial exploits for years. He lives large (but tastefully), as you would expect of a billionaire hedge fund manager. He’s got an apartment at 15 Central Park West, a home in the Hamptons, a private-jet and a megayacht. He’s a big surfer. (Third Point is named after a break in a favored surfing spot near his hometown of Los Angeles.) He’s got a world-class collection of contemporary art. He’s plenty open-minded, borderline liberal... |
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FOUR STORIES WE'RE TALKING ABOUT |
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Zaslav’s Disappearing Act |
WBD C.E.O.’s ruthless culling of HBO Max properties makes sense to Wall Street, but not to creators. |
JULIA ALEXANDER |
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