Dan Loeb’s Third Point has built a sizeable stake in consumer giant Colgate-Palmolive, according to CNBC’s David Faber.

Loeb sees hidden value in Colgate’s subsidiary Hill’s Pet Nutrition, a pet food company, if it were spun off.

The investor believes as a stand-alone business, Hill’s could deliver even faster growth and better margins, and could achieve a valuation close to $20 billion on its 2023 numbers, Loeb will say in a forthcoming investor letter, according to sources.

Colgate has been investing behind its pet food business, its fastest growing unit. Hill’s has always pitched itself as backed by “science,” which from a brand perspective is seen as on trend.

The activist and hedge fund manager added that consolidation in the consumer health sector point to more opportunities for Colgate. Loeb said Colgate could become part of the current M&A “minuet” in consumer health. 

Shares of Colgate jumped more than 3% on Tuesday. The stock is still down about 15% this year.