Daniel Loeb shares his insights in his latest Q3, 2024 letter to investors, where he sheds light on an array of issues from how he is positioning his portfolio with a new Trump administration, America First Policy, his top winning stocks and most intriguingly, his new positions.
During the Third Quarter, Daniel Loeb Third Point Offshore generated gains of nearly 4%, bringing year-to-date returns to 14%, net of fees and expenses.
“During the Third Quarter, Daniel Loeb Third Point Offshore generated gains of nearly 4%, bringing year-to-date returns to 14%”
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Top stock shakers, Daniel Loeb shares his insights
“The top five winners for the quarter were a private position in R2 Semiconductor, Pacific Gas and Electric Co., Vistra Corp., KB Home, and Danaher Corp. The top five losers for the quarter, excluding hedges, were Bath & Body Works Inc., Amazon.com Inc., Advance Auto Parts Inc., Alphabet Inc. and Microsoft Corp,” wrote Daniel Loeb
Daniel Loeb noted that the “Magnificent Seven” trailed the broader market, albeit modestly, for the first time since Q4 2022.
“Rate-sensitive stocks and cyclicals significantly outperformed as the market shifted its focus to the Fed’s long-awaited easing cycle,” he wrote.
Daniel Loeb’s Third Point has a range of investment themes outside of large-cap tech. These investments in industrials, utilities, materials, and other housing-sensitive stocks led the portfolio for Q3.
“The top five losers for the quarter, excluding hedges, were Bath & Body Works Inc., Amazon.com Inc., Advance Auto Parts Inc., Alphabet Inc. and Microsoft Corp”
DANIEL LOEB
“The market has been inexorably climbing a wall of worry. At times, the worry turned to despair, at the beginning of August, when the Nikkei tanked roughly 20% in a few days and volatility in the US exploded to nearly 70 from 16, all while US markets dropped 6%. Many pundits saw this as a warning that the market had more room to drop and that, in the best case, stocks had become “un-investable” through the election,” he wrote. Daniel Loeb stayed committed to the fund’s positions and increased investments in event-driven and value-oriented stocks.
“In the economy, we see no evidence of recession, slowing inflation, and a real interest rate that still needs to come down. We believe healthy consumer spending and active levels of individual investing should provide a liquidity backdrop to sustain market levels” – Daniel Loeb
Daniel Loeb shares his insights into investing during America First policies
“We believe the proposed “America First” policy’s tariffs will increase domestic manufacturing, infrastructure spending, and price of certain materials and commodities. We also believe that a reduction in regulation generally and especially in the activist antitrust stance of the Biden-Harris administration will unleash productivity and a wave of corporate activity,” he wrote.
“Accordingly, we have increased certain positions that could benefit from such a scenario via both stock and option purchases and continue to shift our portfolio away from companies that will not,” he added.
Inflation, the economy and interest rates, Daniel Loeb shares his insights
“In the economy, we see no evidence of recession, slowing inflation, and a real interest rate that still needs to come down. We believe healthy consumer spending and active levels of individual investing should provide a liquidity backdrop to sustain market levels.
We think this setup is a particularly good one, for event-driven investing,” he wrote.
Daniel Loeb shares his insights into the new positions
“During the Third Quarter, we initiated a new position in the Danish freight forwarder DSV, ” he wrote.
The fund also took a stake in Cinemark, the third-largest movie theatre chain in the US.
“We are also finding value in several loan-only structures that have lagged the rally in the high-yield market,” he added.
