Markets: Investor Dan Loeb Wins Big From Online Lender Upstart

  • General
  • September 10, 2021
  • 157
  • 6 minutes read

Dan Loeb

Certain times, there are investments you hear of that brought about astounding profits and you go thinking “why didn’t I think of that?”, what if I bought BTC earlier on…what if I bought Zoom stock before the pandemic..but here’s the thing, you may have bought something else that crashed to the ground and lost you good money.

But nonetheless, there are times where see certain investment windfalls that just deserve to be highlighted and we’re here with one today. It’s that of Dan Loeb, a well-known hedge fund honco who runs Third Point Management. His bet on a certain early-stage tech startup has proved to be savvy and brought in big profit.

  • Loeb invested in Upstart, an online lender that went public last year, earlier on. Precisely, his fund invested a total of $90mn for shares now worth over 40x that, moreover in the span of six short years. 
  • Loeb’s Third Point first invested in Upstart in 2015 when the online lender was still an early stage startup. In ensuing years, it invested a total of $66mn, then topped it up with a $24mn share purchase during Upstart’s IPO last December.
  • Following its IPO, Upstart stock has shot up astronomically, going from $20 at debut to about $290 now, a 1450% gain. This has made the company’s early investors like Third Point smile very much to the bank, with stakes worth a few millions before now worth tens of millions and stakes of a few hundred millions now worth a few billions.
  • In Third Point’s case, the hedge fund disclosed having 13.4 million Upstart shares as at June ending in its latest 13-F filing to the SEC. Later on in August, it pocketed roughly $200mn by selling some shares, an SEC disclosure revealed, leaving the fund with 12.4 million shares.
  • At this point, 12.4 million shares of Upstart (NASDAQ: UPST) are worth $3.6bn given the company’s current share price of $289.60. Then to add the $200mn Loeb’s hedge fund has already cashed out, $3.8bn is a really big gain for a $90mn investment.
  • In the frothy stock markets, Upstart has been a major beneficiary. Thanks to its booming business of partnering with banks and credit unions to provide loans to consumers vetted with non-traditional variables, Wall Street has really favored the stock. From a $1.6bn market cap at debut, it’s now worth $22.5bn.
  • Being just a middleman in the lending process and handing out loans from partner banks and credit unions rather than its own cash coffers, Upstart is able to operate a relatively lean business with robust revenues. The company posted $233mn in revenue in the whole of 2020 and then thanks to astounding growth $194mn in just the three months from April-June this year.
  • With its striking growth metrics, it’s no surprise that Upstart has become a Wall Street favorite and brought big gains for its shareholders, especially those that invested early. For Loeb, it’s even better as Upstart stock made up 10% of his fund’s $17bn stock portfolio as at June ending. Since then, the stock has doubled and now accounts for even much more of the portfolio.

Photo: Dan Loeb

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