After trying and failing to pressure Sony to spin off its entertainment division into a separate company, Loeb gradually lowered Third Point’s position. At the time, the activist investor slammed Sony Pictures’ greenlighting process for producing expensive flops such as “White House Down” and “After Earth.”
Even though Sony did not embrace his suggestions and the company expects to lose more than $2 billion for the fiscal year, it was a profitable investment for Third Point. The hedge fund generated a 20% return on its investment, Loeb wrote in an investor letter.
He also praised Sony CEO Kazuo Hirai for cutting costs, transitioning out of the personal computer business, overhauling its television division and increasing transparency, but did sound a note of caution.
“They have a long way to go and we continue to believe that more urgency will be necessary to definitively turn around the company’s fortunes,” Loeb wrote.
At one point, Third Point was Sony’s largest investor with a 7% stake, but by February had shifted its position between shares and swaps, falling out of the company’s top 10 investors.
Loeb also wrote that Third Point had purchased “a significant position” in online auction company eBay during the third quarter, has continued to invest in AliBaba following its public offering last summer, and thinks PayPal has opportunities for growth despite the debut of Apple Pay and increased competition in the mobile retail world.
A spokeswoman for Third Point, which invests in Variety, declined to offer additional comment and a spokesman for Sony declined comment.