Dan Loeb’s Third Point has gotten off to a strong start this year.
The multistrategy hedge fund firm posted a 3.3 percent gain in January in its Third Point Investors fund, according to the latest monthly tear sheet, made public Wednesday evening. For comparison, the S&P 500 saw a 2.8 percent rise, including dividends.
Virtually all of the increases were driven by the fundamental and event-driven book in Third Point’s equities strategy. The biggest winners were Facebook parent Meta Platforms; Amazon; UBS Group; Siemens Energy, the spin-off of the former gas and power division of Germany-based Siemens; and industrial technology conglomerate Fortive.
In its fourth-quarter letter, also made public Wednesday, Third Point told clients it is bullish on stocks for 2025. “We expect the environment for investing in equities to continue to be favorable, with the caveat that there will likely be periodic dislocations caused by the unconventional approach of this administration in conveying and enacting policy that affects markets and the economy,” the hedge fund stated.
“In this environment, we believe an unemotional response, independent of one’s political views, is critical to making good investment decisions,” it added. “We remain optimistic about the sectors that will benefit from certain of these policies, as well as an increase in M&A and other corporate activity which feeds our event-driven framework.”
Third Point conceded that there is uncertainty about some policies and strategies even as business leaders are generally optimistic about economic growth and reduced bureaucracy and regulation. “It has never been more important to employ second-order thinking about news headlines in general, and certain policy declarations in particular,” it stressed.
The hedge fund pointed to several major events of the past week or so that temporarily rocked the markets, only to see reactions rapidly shift. For example, breaking news about China’s DeepSeek sent tech and artificial intelligence investors into a panic, raising questions about a number of future developments, from Nvidia’s growth prospects to overall power demand for data centers.
“Initial reports that the app was built on open-source data on antiquated chips by moonlighting hedge fund quants were subsequently debunked,” Third Point reminded investors. “This is not to say that DeepSeek is not a stunning breakthrough, but we believe the initial reaction seems to have been overdone. We believe there are many companies such as Meta and others that will likely benefit from the technology.”
A similar panic followed the Trump administration’s announcement of tariffs against Mexico, Canada, and China. Third Point noted the tariffs “will be less impactful” than the headlines currently imply. “We see more-modest tariffs, implemented by the Treasury and Commerce departments, early this spring,” it said.
At the end of January, Third Point’s equity book was roughly 108 percent long and 31 percent short, for a net long exposure of 71.2 percent. This compares with a net long exposure of 76.5 percent at year-end, according to the most recent monthly reports.
Heading into February, Third Point’s five largest equity long positions were California utility Pacific Gas & Electricity, Amazon, chip manufacturer Taiwan Semiconductor Manufacturing, Meta, and Fortive. This is the first time Fortive has cracked Third Point’s top-five positions. The credit book was roughly 35 percent net long at the end of January, per the monthly report.
