Dan Loeb's Third Point Boosts AI Investments with Amazon, Nvidia, and TSMC Stakes in 2023
In 2023, Dan Loeb's Third Point hedge fund significantly increases its AI-focused portfolio by acquiring major shares in Amazon, Nvidia, and Taiwan Semiconductor, shifting away from defensive stocks.
Third Point hedge fund reduces Alphabet holdings while expanding positions in Microsoft and Alibaba to capitalize on AI growth.
Dan Loeb’s Third Point fund has intensified its focus on artificial intelligence (AI) investments by acquiring substantial stakes in top tech companies such as Amazon (AMZN), Nvidia (NVDA), and Taiwan Semiconductor Manufacturing Company (TSMC). This strategic move follows the fund’s reflection on missed opportunities during the recent tech rally due to prior emphasis on value stocks.
Highlights
- Third Point’s latest 13F filing reveals a strong pivot toward AI-driven equities.
- Loeb regards AI as a transformative, once-in-a-decade technological revolution.
- Key holdings now include AI leaders like Alibaba, Microsoft, and Nvidia.
Transition from Value Stocks to AI Growth Leaders
The fund added approximately 4.1 million shares of Amazon, valued around $534 million, making it the third largest holding in its portfolio as of June 2023. Loeb anticipates significant growth from AI advancements, particularly through Large Language Models (LLMs), prompting increased investments in semiconductor giants Nvidia and TSMC, alongside Micron (MU) and Advanced Micro Devices (AMD).
Additionally, Third Point expanded its stakes in Microsoft (MSFT) and Alibaba (BABA), reinforcing its commitment to AI growth sectors. Notably, the fund reduced its position in Alphabet (GOOG/GOOGL) from 4.75 million to 1.42 million shares, citing a strategic shift despite Alphabet’s role alongside Microsoft and Amazon as essential providers of cloud infrastructure for AI development.
Reducing Defensive Positions and Short Sales
To fund its AI investments, Third Point liquidated its entire $830 million stake in Colgate-Palmolive (CL), anticipating that easing inflation will negatively impact consumer staples. The fund also exited its $158 million position in UnitedHealth Group (UNH) by the end of Q1 2023.
Loeb expressed regret over earlier investments in value stocks rather than technology, acknowledging the missed gains in the tech sector. Furthermore, the fund has scaled back on short-selling activities, noting that fundamental analysis has been overshadowed by market volatility driven by options expirations and social media trends, referencing the 2021 meme stock phenomenon.
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