Why This Billionaire Hedge Fund Manager Wants to Break Up United Technologies

In his letter to investors, Activist investor Dan Loeb's said that his hedge fund Third Point initiated a "significant stake" in United Technologies Corporation (NYSE: UTX)in the fourth quarter of 2017, and said, "Third Point did not invest in UTC for what it is today, but for what it could become." In a nutshell, Loeb's investment is based on a sum-of-the-parts analysis of the company that yields a valuation of around $190 to $210 per share, compared to the current price of $124.

Loeb's view is that the best way to release the intrinsic value in the company is by breaking it up. Let's take a look at his arguments and judge whether they are valid or not.