Billionaire investor Dan Loeb reveals Shell stake in push to break up the oil major - and trumpets his Upstart and Rivian bets

• Dan Loeb disclosed a position in Shell and called for the oil major to be broken up.
• The billionaire investor touted his Third Point fund's bet on Rivian, the electric-vehicle startup.

Billionaire investor Dan Loeb revealed a stake in Royal Dutch Shell, trumpeted his bets on Upstart and Rivian, and warned stocks could come under pressure in 2022 in his third-quarter letter to investors.

Loeb's Third Point built a roughly $750 million position in Shell, Reuters reported, making the London-listed oil major one of the hedge fund's biggest holdings. The investor placed the wager because he wants to push for a wholesale restructuring of the company, which he expects to unlock value and bolster shareholder returns.

"Shell has too many competing stakeholders pushing it in too many different directions, resulting in an incoherent, conflicting set of strategies attempting to appease multiple interests but satisfying none," Loeb said in his letter.

Loeb proposed breaking up the energy group into several companies, as that would match its business units with aligned shareholders and make them more nimble and flexible. As independent entities, the legacy business could prioritize returning cash to shareholders, while the energy-transition segment could invest aggressively in renewables, he said.

"While daunting, there is perhaps no bigger ESG opportunity than in 'Big Oil,' and specifically, at Royal Dutch Shell," Loeb noted.

Elsewhere in his letter, the hedge fund manager touted Third Point's stake in Upstart, which cost $90 million and would fetch $4.2 billion at the AI-powered lending platform's current stock price. He highlighted the fund's private investment in Rivian in late 2020, and noted it added to its stake during the electric-vehicle startup's $2.5 billion fundraising in July.

If Rivian goes public at a purported $80 billion valuation later in 2021, Third Point could make well over 30 times its money on paper in roughly a year.

Unsurprisingly, Loeb showered the automaker with praise: "We are confident that they are best in class in every way: vision, strategy, talent, execution, partnerships and amount/quality of capital raised so far."

Loeb shared his outlook for 2022, highlighting strong consumer balance sheets, low inventories, and the recovery of supply chains from the pandemic.

"We remain constructive but increasingly cautious, as the tapering of fiscal and monetary stimulus should reduce support for asset prices," he said. Third Point has added more short positions against individual companies, and will be ready to pounce if quality stocks get cheaper, he added.

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