By Svea Herbst-Bayliss
NEW YORK (Reuters) -Billionaire investor Daniel Loeb is betting 2025 will bring a more favorable stock investing environment despite the Trump administration’s “unconventional” approach to announcing and enacting new policies.
Loeb’s hedge fund Third Point is already reaping the benefits, he told clients in a quarterly letter seen by Reuters on Tuesday, with the firm’s flagship TP offshore fund up 3.3% in January after finishing last year up 24.2%.
Third Point follows a variety of strategies ranging from stock picking to activist campaigns and credit investments and ranks among Wall Street’s most closely watched hedge funds.
Last year, for example, Loeb said the firm rotated into consumer discretionary, financial and industrial companies that helped fuel returns after in a post-election rally.
After the Trump administration imposed tariffs on Canada, Mexico and China, called for a Wealth Fund and signed dozens of executive orders all in the first two weeks in office, Loeb said emotions need to be eliminated to make good investments.
Certain sectors will benefit from the new policies, and he expects to see an uptick in “M&A and other corporate activity which feeds our event-driven framework.”
Among stocks, Third Point made a new investment in Siemens Energy, which makes gas turbines, electrical grid equipment and wind turbines, late in the third quarter of 2024. Demand for more power from data centers or the electrification of transport will increase the demand for grid equipment and gas turbines and help fuel demand for Siemens Energy’s core business.
As Third Point puts more focus on credit investments, Loeb also pointed to liability management exercises (LMEs), a strategy companies use to restructure debt and avoid bankruptcy, as the “most engaging distressed credit opportunities.”
He said LMEs represent half of the firm’s current corporate credit portfolio, or over $700 million. “We expect this area to be an important source of alpha in the coming months,” he added.
As M&A activity is expected to pick up this year with fewer regulations and governmental challenges expected, banks will likely sell more consumer and mortgage portfolios, Loeb said. Third Point will be an opportunistic buyer, hoping to be paid unlevered yields in the high single digits, he said.
As M&A activity is expected to pick up this year with fewer regulations and governmental challenges expected, banks will likely sell more consumer and mortgage portfolios, Loeb said, adding Third Point will be an opportunistic buyer, hoping to be paid unlevered yields in the high single digits.
With Washington expected to be friendly towards M&A this year, banks are likely to sell consumer and mortgage portfolios, Loeb said. He added that Third Point will be an opportunistic buyer, looking for unlevered yields in the high single digits.
(Reporting by Svea Herbst-Bayliss; Editing by Chris Reese and Cynthia Osterman)
