Billionaire hedge fund manager Daniel Loeb has revealed that his fund has taken a sizeable “long equity position” in Nokia expecting that its value will soar following the sale of its handsets division to Microsoft.
In a letter to investors to his hedge fund Third Point, he said that the “New Nokia” will have approximately 8 billion EUR of net cash when the transaction closes, and he expects that a meaningful portion of the excess will be distributed to shareholders in coming quarters.
The letter went on to add: “We think the repositioning of the new Nokia story will take time for the broader investment community to absorb, which allows us to initiate the position at such a significant discount. Meanwhile, the prospect of a substantial one-time capital return and possible reinstatement of a regular dividend further enhance our upside potential.”
Following the investment, Nokia’s share price rose by nearly 3%.
The Third Point hedge fund manages around $14 billion in assets and is one of the industry’s best performers.