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Daniel Loeb Secures Stake In SentinelOne

Summary

  • The California-based company made its debut at the end of June, becoming the highest-valued cybersecurity IPO in history.

Third Point leader Daniel Loeb (TradesPortfolio) revealed earlier this week he entered a 10.34% stake in SentinelOne Inc. (SFinancial), which went public at the end of June.

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Using an event-driven, value-oriented approach to picking stocks, the guru’s New York-based firm is known for taking activist positions in underperforming companies with a catalyst that will help unlock value for shareholders.

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According to GuruFocus Real-Time Picks, a Premium feature, Loeb invested in 26.5 million shares of the Mountain View, California-based cybersecurity company on July 2, allocating 7.38% of the equity portfolio to the holding. Shares traded for an average price of $44.59 each on the day of the transaction.

Founded in 2013, the company, which offers artificial intelligence-powered solutions to prevent, detect and fight cyberattacks on a single autonomous XDR platform, has a $12.58 billion market cap; its shares were trading around $49.04 on Wednesday with a price-sales ratio of 281.98.

GuruFocus data shows the stock has gained an estimated 15.42% since its initial public offering on June 30.

In early June, SentinelOne announced its intention to go public on the New York Stock Exchange with a 35 million-share common stock offering. For its debut, the company priced its shares at $35 each. As is customary, underwriters were given a 30-day option to purchase up to an additional 5.25 million shares at the IPO price.

The company’s offering closed on July 2, having raised $1.33 billion in net proceeds after deducting underwriting discounts and commissions. With an implied valuation of $8.2 billion, CNBC reported it became the highest-valued cybersecurity IPO in history, surpassing CrowdStrike Holdings Inc.’s (CRWDFinancial) $6.7 billion market debut in 2019.

Despite not having much of an established earnings history, GuruFocus rated SentinelOne’s financial strength 3 out of 10. In its IPO prospectus with the Securities and Exchange Commission, SentinelOne disclosed revenue grew 108% year over year to $37.4 million while net losses more than doubled to $62.6 million.

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Insight Holdings Group LLC has also disclosed a position in SentinelOne.

Portfolio composition and performance

The guru’s $14.84 billion equity portfolio, which was composed of 125 stocks as of the three months ended March 31, is most heavily invested in the financial services (20.98%) and technology (17.42%) sectors.

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Other software stocks Loeb held as of the end of the first quarter included Paysafe Ltd. (PSFEFinancial), Intuit Inc. (INTUFinancial), Microsoft Corp. (MSFTFinancial), Uber Technologies Inc. (UBERFinancial) and Shopify Inc. (SHOPFinancial).

The Third Point Offshore Fund posted a 20.5% return for full-year 2020, outperforming the S&P 500’s 18.4% return.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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