Dan Loeb is generally known as a mover and a shaker contained in the investing world. He founded the Latest York-based hedge fund Third Point in 1995. It now has roughly $11.5 billion in assets under management. Loeb’s net price stands at $3.3 billion, in accordance with Forbes.
The activist investor did some moving and shaking in his hedge fund’s portfolio contained in the fourth quarter of 2023. Loeb reduced his stakes in Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT). Nevertheless, the billionaire investor bought one other “Magnificent Seven” stock.
Taking profits
Loeb sold 210,000 shares of Microsoft in Q4. While this reduced Third Point’s stake contained in the tech giant by over 9.4%, Microsoft stays the second-largest holding contained in the hedge fund’s portfolio.
The billionaire investor has owned Microsoft on and off since 2006. He most recently initiated a recent position contained in the fourth quarter of 2022, just in time to ride the generative AI wave began by OpenAI’s launch of ChatGPT. Microsoft was a giant beneficiary of this wave on account of its partnership with OpenAI.
Third Point first owned Amazon in late 2019 and held the stock through the second quarter of 2022. Loeb didn’t stay on the sidelines long with the e-commerce and cloud services leader. He initiated a recent position in Amazon contained in the second quarter of 2023. Although he reduced Third Point’s stake contained in the stock by nearly 10.3% in Q4 2023, Amazon still ranks because the hedge fund’s third-largest holding.
Why did Loeb trim his positions in Amazon and Microsoft? The virtually actually reason is he desired to take some profits. Each stocks delivered impressive gains last 12 months.
A superb larger bet on Meta
Although Loeb cooled somewhat on two Magnificent Seven stocks, he placed a superb larger bet on Meta Platforms (NASDAQ: META). The hedge fund manager increased Third Point’s stake in Meta by nearly 5.5% in Q4 2023. The $410.6 million value of the position made Meta the sixth-largest holding for Third Point at the best of 2023.
Loeb’s history with Meta goes back to the second quarter of 2016 when he first bought the stock. He owned shares of the social media company for just slightly bit over two years before exiting the position. The activist investor again bought Meta stock contained in the second quarter of 2020 and maintained a position through 2021 Q4. Loeb went back to the well contained in the third quarter of 2023 with one other recent stake in Meta.
Like Amazon and Microsoft, Meta enjoyed a generative AI tailwind last 12 months. Nevertheless, I feel that wasn’t Loeb’s primary reason for adding to his position contained in the stock. As a substitute, my hunch is that Loeb liked Meta’s moves to extend its profitability.
Those efforts are paying off. Meta’s earnings greater than tripled 12 months over 12 months in 2023 Q4. Full-year profits jumped 69%.
Did Loeb make probably the most effective moves?
In a single sense, Loeb went one for 3 with these Magnificent Seven transactions. Loeb’s decision to extend Third Point’s stake in Meta is already paying off. Meta stock has skyrocketed over 45% for the reason that end of 2023. Nevertheless, Amazon and Microsoft are also up by double-digit percentages 12 months up to now. Loeb could have made extra money by holding his shares in each corporations.
Nevertheless, trimming the positions in Amazon and Microsoft could still have been probably the most effective call for Loeb. Each stocks make up significant percentages of Third Point’s portfolio. Chances are high you’ll’t blame any investor for wanting to make sure their holdings aren’t overly concentrated in a handful of stocks.
Over the long run, I feel that Loeb — and other investors — will probably be well served by owning all three of those stocks. Amazon’s and Microsoft’s cloud businesses should proceed to grow robustly thanks largely to AI. I like Meta’s take into consideration business messaging and smart glasses with embedded AI assistants. I predict Amazon, Microsoft, and Meta will remain magnificent for a very very very long time to come back back back.
Do you’ve got to take a position $1,000 in Meta Platforms immediately?
Before you purchase stock in Meta Platforms, consider this:
The Motley Idiot Stock Advisor analyst team just identified what they consider are the 10 best stocks for investors to purchase now… and Meta Platforms wasn’t one amongst them. The ten stocks that made the cut could produce monster returns inside the approaching years.
Stock Advisor provides investors with an easy-to-follow blueprint for achievement, including guidance on constructing a portfolio, regular updates from analysts, and two recent stock picks every month. The Stock Advisor service has greater than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 8, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of directors. Keith Speights has positions in Amazon, Meta Platforms, and Microsoft. The Motley Idiot has positions in and recommends Amazon, Meta Platforms, and Microsoft. The Motley Idiot recommends the next options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
Billionaire Dan Loeb Sold Amazon and Microsoft but Bought This “Magnificent Seven” Stock was originally published by The Motley Idiot