Daniel Loeb’s Third Point tops up $750m Shell stake

In today’s top stories, Third Point increased its stake in Shell, demand for gold soared to its highest level since Q3 2020 and Goldman Sachs recommended buying cybersecurity stocks. Meanwhile, value stocks in emerging markets are lagging far behind those in European and US markets, as the S&P 500 tumbles.

Third Point buys more Shell

Dan Loeb’s Third Point upped its $750m stake in Shell [SHEL.L] in Q1 2022, according to its latest shareholder letter, having first taken a stake back in October. Loeb called for a shakeup in the corporate structure of the oil giant, citing its “disparate businesses” as “confusing and unmanageable”. Liquified natural gas has been identified as the standout in its portfolio that can deliver long-term value.

Disney poised for growth

The entertainment company is forecasted to report positive earnings and revenue figures when it publishes its first quarter results on 11 May. The company’s iconic theme parks, which largely stayed shut during lockdown periods, are expected to play a major role in boosting its balance sheet. During the previous quarter, this segment of the business had posted its second-best quarter of all time.

Value rotation continues

The US Federal Reserve’s policy tightening is pushing investors out of growth stocks and into value. But not into emerging markets. According to Bloomberg, rates aren’t going up everywhere simultaneously. This is weakening the value rotation case in China, which has been cutting them despite a looming slowdown and fears of a Covid-19 resurgence, and in Brazil, which is coming to the end of its hike.

Analysts see 90% upside for Melrose

The UK manufacturing company [MRO.L] had its share price target slashed by JPMorgan last week, from 240p to 215p. However, this still represents a 90% upside from the stock’s closing price on 6 May. Despite the stock falling 29% so far this year, a group of 10 analysts have an average price target of 205.2p, representing a 78% rise from 6 May close.

Gold shines bright amid market gloom

Precious metals are proving to be a popular safe haven thanks to inflation and the conflict in Ukraine. Demand for gold rose 203% year-over-year to 551 tonnes in the first quarter of 2021, according to data from Gold Demands Trends, with gold-backed exchange-traded funds rising by 269 tonnes. This was the highest flow level since Q3 2020, reported Barron’s. The SPDR Gold Trust [GLD] was up 2.38% year-to-date at the close on 6 May.

S&P stocks slump

The sharper stocks rise, the further and harder they fall. This was the conclusion of MarketWatch columnist Mark Hulbert, who has analysed the performance of S&P 1500 stocks between January 2020 and December 2021. Some 46% of stocks that beat the index by more than 50% in this two-year period have been trading 40% lower at some point in the first four months of 2022.

Goldman looks to cybersecurity

The events of last week highlighted the risks presented by big tech stocks. In an interview with CNBC, Goldman Sachs fund manager Brook Dane warned that investors should be turning away from mega-caps and looking instead at mid-cap companies, especially in cybersecurity. His top two picks are Palo Alto Networks [PANW] and Zscaler [ZS].