Third Point unveils HR position and calls for more action at Disney
NEW YORK, Aug.6 (Reuters) – Daniel Loeb’s hedge fund Third Point told investors on Friday it had made a new bet on high-end homeware retailer RH (RH.N) and was urging the management of Walt Disney Co (DIS.N) to do more to unlock the full potential of its streaming service.
Loeb wrote in a letter to investors which was seen by Reuters that he is confident that RH, formerly known as Restoration Hardware, will generate rapid profit growth and expand overseas under the leadership of CEO Gary Friedman, whom he called “once in a generation leader.”
The billionaire investor also urged Disney’s management team to take more action to maximize the potential of its streaming platform, suggesting an “all-you-can-eat approach to its direct-to-consumer offering.”
Loeb, who has often criticized CEOs, praised Disney executives for past decisions, including suspending the company’s dividend in the first half of fiscal 2020.
His investment in Disney, which was unveiled about a year ago, has paid off, Loeb said, as his optimistic view of Disney’s streaming service has proven to be correct. The company’s stock price has climbed 70% since May, with Disney + streaming now generating more than $ 15 billion in annual revenue from a base of 159 million subscribers.
Still, work awaits us, the letter suggested.
âWhile the progress to date has been commendable, there is still more that can be done to realize Disney’s full streaming potential,â Loeb wrote.
For example, the company could offer its various content on a single platform under the Disney + brand, “where all cinematic content is available day and date at no additional cost to subscribers,” he wrote.
Disney’s CEO and CFO impressed Loeb and his team with their “relentless pursuit of long-term value creation” and “done what’s right for customers.”
But âestablishing a lasting leadership position in the competitive global streaming market will require tough choices, aggressive investments, unwavering focus and constant innovation,â he wrote.
Third Point gained 15.2% in the first half of 2021.
Reporting by Svea Herbst-Bayliss; Editing by Steve Orlofsky
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