Another billionaire investor is rooting for Republican presidential candidate Donald Trump’s victory in the Nov. 5 election and has accordingly positioned his portfolio. The call comes on the heels of former hedge fund manager Stanley Druckenmiller‘s similar prediction.
What’s In Store In Political Arena: “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,” said hedge fund Third Point founder and CEO Daniel Loeb said in the firm’s third-quarter investor letter.
The hedge fund manager said the “America First” tariffs will increase domestic manufacturing, infrastructure spending, and prices of certain materials and commodities. He also said a potential reduction in regulation in the activist antitrust stance of the Biden-Harris administration would unleash productivity and a wave of corporate activity.
“Accordingly, we have increased certain positions that could benefit from such a scenario via both stock and option purchases and continue to shift our portfolio away from companies that will not,” the hedge fund manager said. A study of Senate races will likely see Republicans establishing a majority, thus precluding a “Blue Sweep” if Kamala Harris wins the race to the White House, according to the hedge-fund manager.
He warned of a “Blue sweep” theoretically ushering in crushing taxes, stifling regulations, and a headwind to
growth.
See Also: What Are Cyclical Stocks
Economic Outlook: Loeb reassured investors regarding the economy. “In the economy, we see no evidence of recession, slowing inflation, and a real interest rate that still needs to come down,” he said.
The hedge fund manager also sees healthy consumer spending, and active levels of individual investing, providing a liquidity backdrop to sustain market levels. The setup is good for event-driven investing, he said, adding that “the potential for risk arbitrage transactions and corporate activity could usher in a golden age for the strategy.”
Third Point’s Q3 Winners & Losers: Third Point Offshore Fund generated a return of 3.9%, taking the annualized net returns to 13.1%. The third-quarter returns of the fund, however, paled before the S&P 500’s 5.9% gain and the MSCI World Index’s 6.5% rise.
Loeb noted that the global market gains continued in the third quarter but the rally broadened out in the quarter, with the Magnificent 7 trailing the broader market for the first time since the fourth quarter of 2022. Rate-sensitive stocks and cyclicals outperformed as the market looked ahead to the easing cycle, he added.
The top gainers and decliners of the fund are as follows:
Gainers
- Privately-held R2 Semiconductor
- PG&E Corporation’s PCG Pacific Gas and Electric Company subsidiary
- Utility Vistra Corp. VST
- KB Home KBH
- Lifesciences and diagnostics company Danaher Corporation DHR
Losers:
- Bath & Body Works, Inc. BBWI
- Amazon.com, Inc. AMZN
- Advance Auto Parts, Inc. AAP
- Alphabet Inc. GOOG GOOGL
- Microsoft Corporation MSFT
Loeb also said his fund initiated a position in Danish freight forwarder DSV. “We believe DSV can earn more than 100 DKK per share in 2027 and see significant upside for one of Europe's best companies,” he said.
The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund that tracks the performance of the S&P 500 Index, traded up 0.25% to $583.78 in premarket trading on Friday, according to Benzinga Pro data.
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