Third Point’s Daniel Loeb believes the odds are growing that former President Donald Trump will win the US presidency next November over Vice President Kamala Harris, and the influential hedge fund manager is working to increase positions that would benefit under a Republican administration and Congress. “We believe the likelihood of Republicans winning the White House has increased, which will have a positive impact on certain sectors and the market overall,” Loeb wrote in a letter to investors obtained by CNBC. “We believe the proposed ‘America First’ tariffs will lead to increased domestic manufacturing, infrastructure spending, and the prices of certain materials and goods… Reducing regulation generally and especially in the activist antitrust stance of the Biden-Harris administration will unleash productivity and increase a wave of activity.” companies.” Polls show the race is still close next November, with a recent NBC News poll showing the Republican candidate and Vice President Kamala Harris deadlocked. But Loeb said in his quarterly letter that he was increasing “purchases of stocks and options” to bet on a Trump victory scenario. Loeb isn’t the only one on Wall Street making these bets, with JP Morgan recently highlighting gains in bank stocks and the US dollar as indicators that more investors see a Republican victory. Some of the companies Loeb highlighted as the fund’s third-quarter winners could benefit from deregulation and increased domestic manufacturing under Trump, notably utility company PG&E, nuclear power company Vistra and conglomerate Danaher. Alphabet — a company that has been criticized by the Biden administration for violating antitrust laws and which Loeb also owns — could also benefit. Additionally, Loeb believes Republicans will form a majority in the Senate, regardless of the outcome of the presidential race, and that limits the downside for these stocks even if Harris wins. His memo comes as Third Point Offshore has underperformed the S&P 500 this year, seeing annualized net-fee returns of 14% compared to broad market gains of roughly 23%. The fund rose 4% last quarter, according to the letter, also lagging the market. Loeb points out that his fund has been hurt in the short term because it maintains broad holdings away from large-cap technology stocks, which have been the stars of the narrow bull market. But he believes that the improvement in market breadth that began in the third quarter is continuing, especially under the Republican administration. Overall, the US economy is in good shape, according to Loeb, as he sees “no evidence” of a recession coming. The director also revealed that he has added a position at Danish shipping company DSV. —Additional reporting by CNBC’s Scott Wapner.
Hedge fund manager Daniel Loeb believes Trump’s chances are increasing
