Dan Loeb’s Third Point added new positions in key artificial intelligence beneficiaries in the second quarter, but still underperformed the broader market. The hedge fund’s latest 13F filing to the SEC showed Tepper taking new stakes in major tech stocks that have rallied this year thanks to investor optimism around the future of AI. As of June 30, he had a position in Amazon worth about $535 million that made the online retailer and web services provider the third-largest position in his fund. He also added a new stake in U.S.-listed shares of Taiwan Semiconductor that amounted to a holding worth $247 million by quarter’s end, or his seventh biggest holding. He also bought shares of Nvidia , adding up to a position worth about $212 million. Separately, he built on existing position in Microsoft by nearly 50%, bringing the investment to a holding worth $517.6 million, the fund’s fifth largest. He also added smaller, but notable, positions in Activision Blizzard and Option Care Health . In spite of his exposure to some of the key stocks that have fueled the majority of the S & P 500’s gains this year, Loeb’s flagship offshore fund has lagged the broader market in 2023. Third Point was higher by just 1.1% in the second quarter, paring its loss in 2023 to 3% so far. Meanwhile, the S & P 500 was ahead 8% in the second quarter, and is higher by 16% on the year. Loeb admitted in a recent shareholder letter that his fund’s underexposure to the largest mega-cap stocks — Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla — was responsible for the fund’s underperformance. “Managers who have had less than 25% of their funds in these stocks have found it challenging to keep up with ‘the market,'” Loeb wrote. “Although we had exposure to Microsoft, AMD, Amazon and Google, the positions were undersized and profits offset by losses from market/basket hedges, single name shorts and several poorly performing long equity positions.” Still, Loeb said he expects many companies will benefit from the effects of generative AI, which is still in its infancy as it makes its impact felt through the economy. The hedge fund leader said he increased his exposure to companies in the “software and semiconductor value chains” that will benefit from increased adoption. “We expect enterprise applications to dramatically accelerate by the early part of 2024,” he wrote. — CNBC’s Yun Li contributed to this report.
