Dan Loeb’s Third Point has taken a new position in American Express Co., saying Chief Executive Officer Stephen Squeri has positioned the credit card company for exceptional earnings growth.
Amex could trade higher than $135 per share in the next 18 months as it benefits from initiatives to capture more consumer, business and international customers, the New York hedge fund said in an investor letter Friday. Its shares were little changed at $108.21 per share as of 3:32 p.m. in New York trading.
“Squeri is re‐energizing Amex by focusing on topline growth and under‐appreciated structural opportunities,” Loeb said. “Efforts we think will lead to more sustainable double‐digit” earnings-per-share growth.
Third Point didn’t disclose the size of its stake. A representative for Amex wasn’t immediately available for comment.
Amex is on the right track now after falling behind in recent years from setbacks including the loss of co-branding relationships with JetBlue Airways Corp. and Costco Wholesale Corp., Third Point said.
“We think this challenging period galvanized the franchise, forcing necessary investments and a strategic pivot that is just beginning to pay off,” Third Point said.
It has an opportunity to boost sales as it prioritizes investments in customer acquisitions, card acceptance and higher average spending, the firm said.
“This is a long runway where Amex is just beginning to inflect after years of under‐investing,” Third Point said.
Amex has relationships with most of the world’s largest publicly traded companies and is much bigger than any of its rivals when comes to providing financing to small and medium-sized businesses, Third Point said. It is well-positioned to benefit from a shift in business-to-business payments.
“No one is better equipped to monetize the opportunity than Mr. Squeri, who previously ran Amex’s commercial division,” Third Point said. The firm cited Amex’s recent deal to issue cards to Amazon.com Inc. small business customers as a “testament” to its position in the commercial market.
Squeri replaced Ken Chenault as Amex’s CEO in February.
Third Point lost about 0.1 percent on its investments in the third quarter amid broader market volatility, according to the letter. Its investments are up 0.6 percent year to date.
--With assistance from Claire Ballentine.
To contact the reporter on this story: Scott Deveau in New York at firstname.lastname@example.org
To contact the editors responsible for this story: Elizabeth Fournier at email@example.com, Scott Deveau
©2018 Bloomberg L.P.