The Morning Brief: Third Point’s Daniel Loeb Says Stocks Have Room to Run

Third Point’s Daniel Loeb used two different forums to talk up his bullishness on the stock market. Citing the quantitative easing policies enacted by a number of central banks, including the U.S. Federal Reserve, the New York-based hedge fund manager told attendees of the New York Times-sponsored DealBook conference that he expects stocks to climb without much of a correction. Loeb, who is best known for his activist positions even though they amount to a small share of his firm’s assets, also told attendees he owns shares of FedEx and has met with founder Fred Smith. He did not own any shares of FedEx at the end of the second quarter, according to regulatory filings. His third quarter 13F filing is required to be filed by the end of the week.

Loeb Tuesday expanded on his bullishness on stocks in a conference call with shareholders of Third Point Reinsurance, a Bermuda insurer that invests most of its premiums with his hedge fund. “Given monetary policy here, the actions taken by Draghi last week in Europe, and what’s going on in the U.K., Japan, and even China, we sort of have a global put to equities,” Loeb said, according to a Bloomberg report. “We’re in a mode where economies around the world, developed economies, are trying to inflate, and that’s usually a good thing for equities.”

Also at the DealBook conference, Citadel’s Kenneth Griffin said he would break up the biggest banks, asserting that mid-sized banks can deliver similar services but more efficiently. He also said he favors bringing back Glass-Steagall, a Depression-era law that prevented an institution from owning both a regulated bank and an unregulated investment banking business. The law was “shattered” in July 2011, Griffin said.

Bridgewater’s Raymond Dalio was more pessimistic than most speakers at the DealBook conference. He told attendees he expects stocks to grow by just 4 percent per year for the next decade. That equates to the expected growth rate of the economy, he explains. However, the 4 percent is better than the anticipated return of bonds and cash. “Most investors won’t be able to produce alpha,” he told the audience. Asked after his presentation what the ramifications are for pension funds and endowments that have mandated expenditures that far exceed that return, Dalio told me, “That’s a discussion for another time.”

Paul Singer’s Elliott Associates late Tuesday said in a regulatory filing it reached a settlement with Emulex, the maker of storage networking products, of which it owns a 6.3 percent activist stake. Under the agreement, the company said that prior to filing its proxy materials for the next annual meeting, it will reduce the size of the board to no more than 11, nominate no more than eight individuals who are now board members and nominate three individuals from a group of candidates previously identified by Elliott and recommend shareholders vote for the trio. The company also agreed to hold the next annual meeting before February 14, 2014. Under the agreement, if Emulex fails to nominate any of the three new board members, Elliott will be permitted to nominate a slate of its own nominees. The agreement also contains certain standstill provisions.

Thomas Sandell, chief executive of Sandell Asset Management, said he has retained proxy solicitation firm MacKenzie Partners and may initiate a consent solicitation to allow shareholders to seek change at Bob Evans Farms. In a letter sent to the board of directors of the food service and retail company, the investor expressed concern over the board’s “lethargic approach to taking action to enhance shareholder value,” following their recent meeting. He also recapped his three-pronged plan for the company.

Steve Cohen’s SAC Capital Advisors disclosed it owns 5 percent of Vitamin Shoppe, the vitamins, nutrition & health supplements retail chain. It was disclosed in a 13G filing, meaning it is a passive position.

London-based GLG Partners disclosed a 5.54 percent passive stake in Tableau Software, Inc., which makes data visualization software.

Citadel disclosed it owns 9 percent of JGWPT Holdings, which went public last week at $14 per share. The company purchases structured settlements, annuity and lottery payment streams. Citadel also disclosed a 6.5 percent passive stake in Norcraft Companies, which makes cabinets and other products for kitchens and bathrooms.

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