In the third quarter, Third Point made two new investments in non-U.S. artificial intelligence companies, one of which is an activist situation. And one of them became its best performer in October.
The hedge fund headed by Dan Loeb explains in its third-quarter letter that because U.S. markets have already “handsomely rewarded many of the major winners of the AI compute theme,” it is looking to the international markets for what it deems “underappreciated opportunities.” It found at least two companies that fit this description: South Korea–based SK Hynix and related holding company SK Square; and Japan-based Ebara.
Both stocks boosted the October results, when Third Point gained 1.3 percent, bringing its return for the year to 8.3 percent. Shares of SK Hynix surged more than 60 percent last month, making it the fund’s top contributor. Ebara rose more than 22 percent.
“We believe both companies are leaders in their respective industries, significant beneficiaries of the AI buildout, and trade at undemanding absolute valuations and meaningful discounts to their U.S. peers,” says the firm’s third-quarter letter, signed by Loeb.
Third Point’s other big winners last month were Amazon; Carpenter Technology, a producer and distributor of specialty metals; chip giant Nvidia; and chip maker Taiwan Semiconductor Manufacturing.
Third Point describes SK Hynix as “part of a global oligopoly in DRAM memory,” alongside Samsung Electronics and Micron Technology. It adds, “This cyclical market has historically exhibited both demand and price volatility, but we believe it is in the early innings of decommoditization.”
The firm explains that AI workloads have been driving substantial growth in high-bandwidth memory, where SK Hynix is the market leader, with a 50 percent-plus market share — noting that although the company has “technological leadership,” its shares trade at just 7 times 2026 earnings estimates. Competitors Micron and Samsung are trading at 10 times and 12 times, respectively.
Third Point points out that by buying SK Square, the holding company that owns 20 percent of SK Hynix, it enables investors to buy SK Hynix at a nearly 60 percent discount, or just 3.5 times earnings estimates. “Management have shown commitment to closing the [net asset value] discount and are selling noncore stakes and repurchasing stock,” it says.
Ebara has a history in fluid machinery, selling standard pumps for water and sewage applications for buildings and custom pumps and compressors for energy and power markets. “Today more than half of the company’s profit comes from products serving the semiconductor industry,” Third Point says.
It also calls Ebara “a leading supplier of semiconductor production equipment,” with the chemical mechanical planarization tool as its primary product line. These tools polish wafers to guarantee structural uniformity throughout the manufacturing process. The hedge fund notes that the CMP market has been a duopoly between Applied Materials and Ebara, with Ebara specializing in metal CMP and Applied Materials focused on oxide CMP.
“Despite these evident opportunities, Ebara trades at a substantial discount to its peers in the semiconductor production equipment space,” Third Point acknowledges. “In our view, the company’s best-in-class product portfolio and attractive end-market exposures are not reflected in a high and consistent margin structure, with group margins significantly lagging those of competitors.” It attributes the margin underperformance to “an overextended cost structure as well as unnecessarily discounted pricing relative to competitors.”
Third Point says that in an effort to enhance shareholder value, it is “in active dialogue” with Ebara’s new management team, which took over earlier this year, and with the board of directors. Discussions include raising corporate margins by more than 50 percent; closing the valuation discount to peers by addressing portfolio complexity; enhancing return of capital to shareholders through share repurchases given the company’s low valuation, strong balance sheet, and ongoing cash flow generation; and improving corporate governance.
