Dow Chemical (DOW)
Click to Enlarge Activist Investor: Daniel Loeb (Third Point LLC)
Earlier this week Daniel Loeb — the activist investor and hedge fund billionaire of Third Point LLC — announced that he has amassed a stake in the DOW stock, making it Third Point’s largest investment at the moment. As I wrote on Wednesday:
“Loeb is calling for a spinoff of Dow’s petrochemicals business, which in his eyes would improve the company’s profitability. He’s also asking DOW to consider a big share buyback that would in essence help to offset a convertible bond deal whereby Berkshire Hathaway (BRK.B) and the Kuwait Investment Authority will get issued a large amount of stock.”
Loeb has a good track record, and in this case. the management of DOW initially doesn’t seem too opposed to his suggestions. If I combine this with the fact that DOW stock recently began to break out of a massive inverse head-and-shoulders formation, I like trading DOW from the long side as well — particularly after it consolidates its recent gains somewhat and more developments from Loeb and DOW come to light.
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.