Billionaire Dan Loeb Sold Third Point's Entire Stake in Tesla in Favor of a High-Yield Dividend Stock That's Doubled in Under 2 Years

Globe and Mail

4 hours ago

Nothing is more valuable on Wall Street than data. The only problem for investors is that keeping atop the latest data releases is a daunting task that can allow something of importance to slip through the cracks.
For example, what can arguably be described as the most important data dump of the second quarter occurred on May 15. But because it was at the start of earnings season and packaged so closely to important economic data releases from the federal government, investors might have overlooked the May 15 filing deadline for Form 13Fs with the Securities and Exchange Commission.
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A 13F is a required filing no later than 45 calendar days following the end to a quarter by institutional investors with at least $100 million in assets under management (AUM). It provides a concise snapshot of which stocks Wall Street's prominent money managers purchased and sold in the latest quarter.
Even though 13Fs are far from perfect -- since they're filed up to 45 calendar days following the end to a quarter, they may present a stale snapshot for an active hedge fund -- they offer key insights as to which stocks and trends have piqued the interest of Wall Street's most-successful asset managers.
While Warren Buffett is the stock market's most famous billionaire investor, he's not the only fund manager known for their phenomenal returns or key insights. Third Point's billionaire chief Dan Loeb is another asset manager with a keen eye for value that investors usually keep close tabs on.
During the March-ended quarter, Loeb was a decisive seller of four "Magnificent Seven" stocks, perhaps none of which stands out more than Tesla (NASDAQ: TSLA). Meanwhile, the value-focused Loeb piled into a brand-name, high-yield dividend stock that's managed to double in value in less than two years.
Billionaire Dan Loeb sent shares of Tesla to the chopping block
To preface this discussion, Dan Loeb operates a relatively active fund that ended the March quarter with more than $6.5 billion in AUM spread across 45 positions. Loeb's average hold time among these 45 positions is just 4.5 quarters, or roughly 13.5 months. In short, he's demonstrated a willingness to lock in gains when presented with a decisive move higher in a security.
Between the third quarter of 2024, which is when Third Point first acquired shares of electric-vehicle (EV) maker Tesla, and the first quarter of 2025, which is when all 500,000 shares of Tesla were sold, this position, at one point, more than doubled in value. Loeb had ample incentive to lock in his fund's short-term gains.
Based on the timing of Loeb's initial investment and selling activity, it's possible his fund's stake in Tesla was based on the expectation of the company benefiting from a Donald Trump victory in November. Tesla CEO Elon Musk was touted as having a role in the Trump administration -- he went on to be a special employee for the Department of Government Efficiency, or DOGE -- which was expected to be a positive for his company's long-term growth ambitions.
But with this story having been played out, a number of red flags associated with Tesla's operations may have encouraged billionaire Dan Loeb to head for the hills.
One of the more glaring issues with Tesla has been the company's declining vehicle margin. Though higher energy and storage revenue has helped to somewhat offset EV demand weakness, more than a half-dozen sweeping price cuts on Tesla's fleet of EVs from growing competition has sapped its vehicle margin.
To add fuel to the fire, Tesla's Cybertruck looks to be a flop. Despite Musk previously claiming that his company had over 1 million reservations for Cybertruck, a recall announced in March of Cybertrucks manufactured from Nov. 13, 2023 to Feb. 27, 2025 showed this recall covered just shy of 46,100 vehicles. That's a far cry from "demand being off the charts," as Musk once touted.
This speaks to the broader issue of Musk's innovations (usually) failing to materialize. While Musk has overseen the launch of a handful of new EVs and diversified Tesla into an energy generation and storage provider, his Level 5 autonomy claims by "next year" have fallen flat for 11 consecutive years. Furthermore, the initial robotaxi launch in Austin, TX, is limited to just 10 vehicles and geofenced to a small coverage area.
If Musk's unfulfilled promises were backed out of Tesla's valuation, its share price, and astronomical forward price-to-earnings (P/E) ratio of almost 120, would plummet.
Loeb's Third Point has piled into an unstoppable high-yield dividend stock
However, Third Point's billionaire chief was also a buyer of select stocks during the March-ended quarter. Though nearly a dozen new positions were opened, arguably none stands out more than the 3,775,000 shares purchased of high-octane dividend stock AT&T (NYSE: T).
Two years ago, investors seemingly wanted nothing to do with AT&T and large telecom companies. In July 2023, a report from The Wall Street Journal alleged that AT&T and other U.S. telecom companies had a network of legacy cables wrapped in toxic lead. The WSJ intimated that cleanup costs and health liabilities could be sizable for legacy telecom companies.
Ultimately, AT&T and its peers refuted the findings of the report. Even if there is some form of future liability for America's legacy telecom providers, it's something that would almost certainly be determined in the U.S. court system, which is notoriously slow. What was viewed as a serious threat to AT&T in July 2023 quickly passed as short-term white noise. AT&T's shares have since doubled in value from their July 2023 lows.
Although AT&T's best growth days are long gone, there are still catalysts working in the company's favor.
For example, AT&T upgrading and steadily expanding the reach of its 5G network has resulted in ongoing postpaid phone additions and mobility sales growth that typically ranges in the low-to-mid single digits. Since access to a smartphone and the internet has effectively evolved into a basic necessity, AT&T is enjoying historically low postpaid phone churn rates that are below 1%.
Additionally, there's been a resurgence in broadband signups since the rollout of 5G. AT&T has added at least 200,000 net customers to its broadband service for 21 consecutive quarters (more than five straight years) and is nearing 30 million cumulative consumer and business AT&T Fiber subscribers. Even with broadband no longer being the growth story it was when the century began, it's still a phenomenal source of operating cash flow and can be used as a tool to encourage high-margin service bundling.
Perhaps best of all, AT&T has dramatically improved its financial flexibility since spinning out its content division, WarnerMedia, in 2022. This spinoff, which saw WarnerMedia merge with Discovery to create Warner Bros. Discovery, led to the assumption of certain debt lots by this new media entity. Whereas net debt for AT&T stood at $169 billion on March 31, 2022, it's fallen to $119.1 billion precisely three years later.
Lastly, AT&T is dishing out a nearly 4% annual yield and sports a reasonable forward P/E ratio of 12.7 amid a historically pricey stock market.
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