Another billionaire investor is throwing his weight behind Republican presidential candidate Donald Trump, predicting a GOP victory in the upcoming November election and strategically adjusting his portfolio accordingly. This comes hot on the heels of a similar prediction from former hedge fund manager Stanley Druckenmiller.
Daniel Loeb, founder and CEO of hedge fund Third Point, expressed his bullish outlook in the firm’s third-quarter investor letter. He believes a Republican win would significantly boost certain sectors and the market as a whole. “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,” Loeb stated.
Loeb anticipates that Trump’s “America First” policies, particularly his tariffs, would propel domestic manufacturing and infrastructure spending while also increasing prices of certain materials and commodities. He also expects a Republican administration to loosen regulations, reversing the activist antitrust stance of the Biden-Harris administration, which, in his view, would unleash productivity and ignite a surge in 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,” Loeb explained.
In addition, Loeb anticipates a Republican majority in the Senate, effectively preventing a “Blue Sweep” scenario, should Kamala Harris win the presidency. He warns of a “Blue Sweep” potentially leading to crushing taxes, stifling regulations, and a significant drag on economic growth.
Loeb also offered a reassuring assessment of the current economic landscape, dismissing any imminent recession fears. “In the economy, we see no evidence of recession, slowing inflation, and a real interest rate that still needs to come down,” he stated. He sees healthy consumer spending and robust individual investing fueling market liquidity.
This economic backdrop, according to Loeb, presents an ideal environment for event-driven investing. He believes the potential for risk arbitrage transactions and increased corporate activity could usher in a golden age for this strategy.
Third Point’s Offshore Fund delivered a 3.9% return in the third quarter, pushing its annualized net return to 13.1%. However, these gains trailed the S&P 500’s 5.9% and the MSCI World Index’s 6.5% for the same period. Loeb noted that while global market gains continued, the rally broadened in the third quarter, with the “Magnificent Seven” tech giants lagging behind the broader market for the first time since the fourth quarter of 2022. He attributed this to rate-sensitive stocks and cyclical sectors outperforming as the market anticipated an easing cycle.
Loeb also disclosed his fund’s top gainers and decliners for the quarter:
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
Furthermore, Loeb revealed that 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 stated.
The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund tracking the performance of the S&P 500 Index, rose 0.25% to $583.78 in premarket trading on Friday, according to Benzinga Pro data.
This news comes amid a broader trend of billionaire investors positioning themselves for a Republican victory in the upcoming election. The implications of this for the economy and markets remain to be seen, but it’s a development worth watching closely.