Billionaire investor Dan Loeb’s hedge fund Third Point had a strong start to 2024 as its offshore fund posted returns of 7.8% in the first quarter, keeping pace with the broader market’s 10.6% gain. Loeb has been a strong advocate for AI as an investing theme and continues to maintain a bullish view on the technology. In the first quarter, he initiated a position in Alphabet and increased his position in Amazon by 22% to about $920 million.
Loeb is also optimistic about the energy transition and sees Vistra, one of the largest independent power producers and retail electricity providers in the US, as a beneficiary of AI-driven electricity demand. Despite volatility in Vistra’s core markets due to weak domestic electricity demand, Loeb praised the company’s “brilliant” capital allocation strategy in his Q1 2024 letter to shareholders. Vistra’s smart moves such as shutting down unprofitable coal plants and acquiring nuclear generation assets from Energy Harbor have positioned it well to meet the world’s growing energy demands.
Another company that Loeb is bullish on is London Stock Exchange Group (LSEG), a UK-based stock exchange and financial data company. He sees LSEG benefiting from generative AI as information retrieval systems in financial services become more powerful. Additionally, Loeb expects LSEG to develop a “powerful Research Assistant application” with Microsoft to streamline financial data processing.
In terms of growth stock picks, Third Point’s Q1 portfolio includes companies like Marvell Technology, Inc., S&P Global Inc., and Taiwan Semiconductor Manufacturing Company Limited (TSM). Marvell Technology is a semiconductor company focused on AI hardware, while S&P Global is a top-tier provider of financial information and data services with a near-monopoly status in the industry. TSM, on the other hand, is a leading semiconductor foundry company with a dominant market share in semiconductor manufacturing.
Overall, Loeb’s investment themes for 2024 revolve around AI and the energy transition. His strategic investments in companies like Vistra, LSEG, Marvell Technology, S&P Global, and TSM reflect his confidence in the future potential of these industries.