Dan Loeb is a prominent investor. He started New York hedge fund Third Point in 1995. It manages $11.5 billion. Forbes estimates Loeb's wealth at $3.3 billion. The activist investor restructured his hedge fund's portfolio in Q4 2023. Loeb cut his Amazon and Microsoft holdings. However, the billionaire bought another "Magnificent Seven" stock.
Taking profits Loeb sold 210,000 MS shares in Q4. The hedge fund's second-largest holding is Microsoft, notwithstanding this 9.4% share reduction. The rich investor has controlled Microsoft intermittently since 2006. His new role began in the fourth quarter of 2022, just in time to ride OpenAI's ChatGPT generative AI wave. Our relationship with OpenAI helped Microsoft capitalize on this wave.
Third Point bought Amazon in late 2019 and held it until Q2 2022. Loeb quickly joined the e-commerce and cloud services leader. Second quarter 2023 saw him start a new Amazon job. He cut Third Point's Amazon stake by 10.3% in Q4 2023, although it remains the hedge fund's third-largest holding. Why did Loeb cut Amazon and Microsoft positions? He probably wants to profit. Both stocks gained significantly last year.
A bigger Meta bet Meta Platforms (NASDAQ: META) was Loeb's biggest bet after cooling on two Magnificent Seven stocks. Third Point's Meta investment rose 5.5% in Q4 2023 under the hedge fund manager. Meta was Third Point's sixth-largest holding in 2023 at $410.6 million.
Meta stock was first purchased by Loeb in the second quarter of 2016. He held social media stock for two years before selling. The active investor bought Meta stock again in Q2 2020 and held until Q4 2021. Loeb bought another Meta share in Q3 2023.
Meta, like Amazon and Microsoft, benefited from generative AI last year. I doubt Loeb added to his stock holdings for that reason. Instead, Loeb likely enjoyed Meta's profitability moves. The efforts are paying off. Meta's Q4 2023 earnings tripled year over year. Full-year profits rose 69%.
Loeb went 1 for 3 with Magnificent Seven trades. Third Point's Meta stake increase is paying off for Loeb. Meta stock is up 45% since 2023. Amazon and Microsoft also have double-digit gains this year. Holding stakes in both firms could have made Loeb more money.
Loeb may have been right to cut Amazon and Microsoft jobs. Third Point holds considerable amounts of both stocks. You can't blame investors for wanting to diversify their holdings.
I think Loeb and other investors will benefit from owning all three stocks over time. Amazon and Microsoft's cloud businesses should grow strongly owing to AI. Meta's commercial messaging and AI-enabled smart glasses are appealing. I expect Amazon, Microsoft, and Meta to thrive for years.
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