2 Stocks David Rolfe And Daniel Loeb See Eye To Eye On


  • Loeb and Rolfe both have positions in UnitedHealth and Disney as of the three months ended June 30.
  • They both sold shares of one stock, while buying the other.

Even though gurus Daniel Loeb (Trades, Portfolio), leader of Third Point, and David Rolfe (Trades, Portfolio), head of Wedgewood Partners, have different investment strategies, they still have a couple holdings in common.

Taking an event-driven, value-oriented approach to picking stocks, Loeb’s New York-based firm is known for taking activist positions in underperforming companies with a catalyst that will help unlock value for shareholders.

In contrast, Rolfe’s St. Louis-based firm approaches potential investments with the mindset of a business owner, striving to generate significant long-term wealth by analyzing a handful of undervalued companies that have a dominant product or service, consistent earnings, revenue and dividend growth, are highly profitable and have strong management teams.

According to GuruFocus’ Aggregated Portfolio, a Premium feature based on 13F filings, the two gurus both have positions in UnitedHealth GroupUNH
Inc. (UNH, Financial) and The Walt DisneyDIS
Co. (DIS, Financial) as of the end of the second quarter.

Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.

UnitedHealth Group

During the three months ended June 30, Loeb curbed his investment in UnitedHealth (UNH, Financial) by 5.79%, while Rolfe trimmed his holding by 1.15%. They have a combined equity portfolio weight of 12.47% in the stock.

The Minnetonka, Minnesota-based company, which provides health care plans and services, has a $488.08 billion market cap; its shares were trading around $521.42 on Friday with a price-earnings ratio of 27.26, a price-book ratio of 6.69 and a price-sales ratio of 1.64.

The GF Value LineVALU
suggests the stock is modestly undervalued currently based on historical ratios, past financial performance and analysts’ future earnings projections.

The company has high outperformance potential with a GF Score of 90 out of 100. It raked in high points for profitability, growth and financial strength, middling marks for momentum and low points for GF Value.

GuruFocus rated UnitedHealth’s financial strength 7 out of 10. Despite the company issuing new long-term debt over the past three years, it is at a manageable level due to adequate interest coverage. The Altman Z-Score of 4.04 also indicates it is in good standing even though assets are building up at a faster rate than revenue is growing. Additionally, value is being created as the company grows since the return on invested capital overshadows the weighted average cost of capital.

The company’s profitability scored a 9 out of 10 rating on the back of an expanding operating margin, strong returns on equity, assets and capital that outperform a majority of competitors and a high Piotroski F-Score of 8 out of 9, meaning conditions are healthy. Due to recording consistent earnings and revenue growth, UnitedHealth has a perfect predictability rank of five out of five stars. According to GuruFocus research, companies with this rank return an average of 12.1% annually over a 10-year period.

GuruFocus estimates Loeb has gained 27.88% on the investment, which he has had since the fourth quarter of 2020. Rolfe has yielded a 22.15% return since establishing the position in the third quarter of 2021.

Gurus with significant positions in the stock include the Vanguard Health Care Fund (Trades, Portfolio), Dodge & Cox, Ruane Cunniff (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Jeremy Grantham (Trades, Portfolio) and Spiros Segalas (Trades, Portfolio), among others.


Loeb entered a 1 million-share stake in Disney (DIS, Financial) during the quarter, while Rolfe boosted his position by 16.46% to 2,300 shares. Together, they have a combined equity portfolio weight of 2.27% in the stock.

The media and entertainment giant headquartered in Burbank, California, which is known for its classic movies and theme parks, has a market cap of $194.82 billion; its shares were trading around $108.47 on Friday with a price-earnings ratio of 62.12, a price-book ratio of 2.06 and a price-sales ratio of 2.42.

According to the GF Value Line, the stock is significantly undervalued currently.

The GF Score of 77 out of 100 indicates the company will likely have average performance going forward. While Disney raked in high marks for profitability and GF Value and moderate ranks for financial strength and momentum, its growth rating was weak.

Disney’s financial strength was rated 5 out of 10 by GuruFocus. In addition to insufficient interest coverage, the low Altman Z-Score of 2.04 cautions the company is under some pressure. The WACC also eclipses the ROIC, so it is struggling to create value.

The company’s profitability scored an 8 out of 10 rating. Although margins are declining and returns underperform over half of its industry peers, Disney has a high Piotroski F-Score of 8. Despite recording declines in revenue per share in recent years, it has a one-star predictability rank. GuruFocus found companies with this rank return, on average, 1.1% annually.

GuruFocus data shows Loeb has gained an estimated 26.07% on the investment so far, while Rolfe has lost approximately 22.68% on his holding since establishing it in the first quarter.

Other gurus with large positions in Disney include PRIMECAP Management (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Yacktman Asset Management (Trades, Portfolio), Bill Nygren (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.

Portfolio composition

Loeb’s $4.22 billion equity portfolio, which was composed of 58 stocks as of the three months ended June 30, is most heavily invested in the health care, energy and utilities spaces.

Rolfe’s $579 million equity portfolio, which is composed of 40 stocks, is most heavily invested in the technology, financial services and communication services sectors.

Source: https://www.forbes.com/sites/gurufocus/2022/09/20/2-stocks-david-rolfe-and-daniel-loeb-see-eye-to-eye-on/