Investing

Billionaire Investor Dan Loeb Looks Beyond Magnificent 7 for Hedge Fund Returns

Will Ashworth

Published: December 19, 2024 3:08 pm

Billionaire Dan Loeb founded his hedge fund, Third Point LLC, in 1995. As of September 30, WhaleWisdom.com reports that it manages $7.4 billion in publicly traded securities. 

Investors are always looking for investing ideas and direction from the wealthy. That’s why 13F holding reports are followed closely by institutional and retail investors. It’s a religion for some. 

In the third quarter, Third Point sold out of 11 stocks, reducing its position to 12 stocks turning over approximately 38% of its portfolio.

The top 10 holdings accounted for 61.3% of the hedge fund’s $7.4 billion portfolio as of Sept. 30. Three of the top 10 holdings are Magnificent Seven stocks, two more are in the top 25, and one is in the top 53. The only Mag 7 stock not held by Loeb is Nvidia (NASDAQ:NVDA). He took a new position of 400,000 shares in Tesla (NASDAQ:TSLA).

In the third quarter, Loeb sold out of Alphabet (NASDAQ:GOOGL), reducing his position in four other Mag 7 stocks. 

Here’s a rundown of what and how much was left in the portfolio and where some of those funds went instead. 

Key Points About This Article:

• Third Point’s big sale of Apple (NASDAQ:AAPL) stock suggests Warren Buffett isn’t the only billionaire getting rid of Magnificent Seven stocks. 
• The hedge fund sold $1.39 billion of Mag 7 stocks during the third quarter. 
• Brookfield (NYSE:BN) has become a popular stock with hedge fund billionaires heading into 2025. 
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The Mag 7 Selloff

A total of 4.27 million shares of Mag 7-related stocks were sold in the third quarter by Third Point. 

• Alphabet led the charge, with the hedge fund selling 1.98 million shares, closing its position, down from 4.13% at the end of June. Based on the average of the high ($191.75) and low ($147.22) share price during the third quarter, the sale would have generated nearly $336 million in proceeds.
• Loeb sold off 710,000 shares of its fifth-largest position in Microsoft (NASDAQ:MSFT). Maybe the hedge fund was concerned about an AI spending slowdown that’s affected Nvidia’s share price in recent weeks. The sale generated approximately $303 million in proceeds.       
• During the quarter, the hedge fund sold 555,000 shares of Meta Platforms (NASDAQ:META), its seventh-largest position, generating $283 million in proceeds. 
• Third Point reduced its second-largest holding, Amazon (NASDAQ:AMZN), by 1.4 million shares, or 27.5%, during the third quarter. Although Amazon still accounts for 9.5% of the hedge fund’s portfolio, the sale generated approximately $247 million in proceeds. 
• Third Point sold 52% (1.02 million shares) of its Apple (NASDAQ:AAPL) holdings in the quarter, generating approximately $221 million in proceeds. Obviously, it got the memo to sell from Warren Buffett. It remains Third Point’s 13th-largest position.  

Based on the high and low average during the third quarter, I estimate that Third Point generated $1.39 billion from the Mag 7 share sales.

Here’s where the lion’s share went.

Dan Loeb Bought 9 New Stocks

The hedge fund bought nine new stocks during the quarter with rankings from 10th to 38th out of Third Point’s 53 holdings. 

The top purchase was in alternative asset manager Brookfield Corp. (NYSE:BN). It acquired 4.725 million shares of its stock for an estimated $217.6 million, or $46.03 a share. Its investment has already scored big returns, up 27% from its original purchase price and 10% from the end of September. 

Billionaire activist investor Bill Ackman’s Pershing Square Capital bought a big chunk of Brookfield stock in the third quarter. It’s now the hedge fund’s top holding, an indication that Brookfield is a winning bet in 2025. 

Other new purchases during the third quarter included a $103 million purchase of Flutter Entertainment (NYSE:FLUT), the online sports betting and iGaming operator that listed its shares on the NYSE in January. This made the NYSE the primary listing ahead of the London Stock Exchange in the UK, where the company is based. This indicates how important the American market is to Third Point’s business and stock. It is Third Point’s 19th-largest holding.

Lastly, it bought 485,000 shares of LPL Financial Holdings (NASDAQ:LPLA) for $115.4 million, or $237.92 a share, in the third quarter. LPL is the largest independent broker-dealer in the U.S. and the hedge fund’s 21st-largest position. Since the end of September, its shares have risen nearly 42% through Dec. 17. 

Of the existing holdings, Third Point’s three largest additions during the quarter were to Intercontinental Exchange (NYSE:ICE), Lyft (NASDAQ:LYFT), and CRH (NYSE:CRH). The hedge fund increased its holdings by 108.5%, 71.43%, and 215.38%, respectively. 

Third Point’s sixth-largest holding is ICE. It added 1.08 million shares in the owner of the NYSE, paying approximately $144 million for the shares. LYFT is the hedge fund’s ninth-largest holding. It added $94 million in shares of the car-hailing business. 

Lastly, it added 1.4 million shares of CRH, North America’s leading building materials solutions business. It is Third Point’s 17th-largest holding. The additional shares cost the hedge fund $115 million.