MW Donald Trump will win U.S. elections, Daniel Loeb's Third Point says

By Louis Goss

Donald Trump is set to win America's elections next month in a victory that will give a boost to U.S. stock markets, Daniel Loeb's hedge fund Third Point has said in its third quarter letter to investors.

Third Point told investors it believes Trump's 'America First' policy positions will increase U.S. manufacturing and drive up infrastructure spending, in what would lift the prices of certain materials and commodities.

The hedge fund, which was started by Daniel Loeb in 1995, said Trump's deregulatory policies will also "unleash productivity and a wave of corporate activity" in the U.S., as it said it has now positioned itself to "benefit from such a scenario."

"Considering political developments over the past few weeks, we believe that the likelihood of a Republican victory in the White House has increased, which would have a positive impact on certain sectors and the market overall," Third Point said.

Third Point said it also believes the Republicans will establish a majority in the Senate, in what would limit the potential for a "Blue Sweep" that would lead to "crushing taxes, stifling regulations, and a headwind to growth."

In its letter to investors, Third Point posted 3.9% gains from its flagship TP Offshore fund in the third quarter, leaving it with gains of 13.1% for 2024 so far. The S&P 500 index SPX increased 5.9% in the third quarter having increased by 9.6% in the year-to-date.

Third Point said its top positions in the third quarter included its 75% stake in privately-owned chipmaker R2 Semiconductor, which at the end of August received a payout from Intel that settled a long-running dispute over alleged patent infringement.

The New York fund also listed housebuilder KB Home (KBH), medical products maker $Danaher Corp(DHR-W)$ $(DHR)$, and utility companies Vistra Corp $(VST)$ and Pacific Gas & Electric $(PCG)$ as its top five winners for the quarter.

Third Point said its top five losers included U.S. retailer Bath & Body Works $(BBWI)$, e-commerce giant Amazon.com $(AMZN)$, car part seller Advance Auto Parts $(AAP)$, Google-owner Alphabet $(GOOG)$, and technology giant Microsoft $(MSFT)$.

The hedge fund noted that in the third quarter, the 'Magnificent Seven' tech companies "trailed the broader market (albeit modestly) for the first time since Q4 2022." Third Point said its gains were led by "investments in industrials, utilities, materials, and other housing-sensitive stocks."

In the third quarter, the money manager acquired stakes in American movie theater owner Cinemark Holdings $(CNK)$ and Danish logistics company DSV (DK:DSV).

-Louis Goss

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October 18, 2024 06:35 ET (10:35 GMT)

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