Activist investor and billionaire Dan Loeb made a comeback in the final quarter of 2023 after losing money during most of the year in addition to suffering losses in 2022. Wall Street Journal earlier this year reported that Loeb’s Third Point, which he founded in 1995, gained between 7.8% to 8.6% in the December quarter. Third Point was also down 21% in 2022. Third Point was a star performer in the pandemic year as the fund closed 2020 up 19%, as Loeb foresaw the economy doing much better than many had expected.
Loeb’s Q1’2024 Returns and Performance
Loeb is known for his activist bets in high-profile companies Intel, Disney and Shell. Some of his bets were highly unsuccessful, while others paid off. Latest data shows Loeb is continuing to retain the Q4’2023 momentum into 2024. In his Q1 letter to investors, Loeb revealed that Third Point returned 7.8% in the flagship Offshore Fund.
Billionaire Loeb Joins the “Soft Landing Camp”
Loeb said in his Q1 letter that he’s in the “soft landing camp” as he believes we are no longer in an inflationary environment. He’s also highly bullish on AI, saying the technology favors the “incumbents” who are deploying massive cash “war chests” to win the “AI arms race,” a term the billionaire used twice in his letter. Loeb is betting on the whole AI spectrum — semiconductors, data centers, AI software and power.
“We shared our views on AI’s transformational potential in recent letters and it is a key element of the thesis for nearly half of our equity positions today. Unlike in past periods of technological paradigm shifts, this new technology favors incumbents who are deploying their financial and intellectual war chests to win the AI arms race. Right now, what we see as the best-run “legacy” companies like Microsoft and Amazon (both of which we own) have built enormous competitive advantages and seen their growth vectors accelerate. Below, we discuss London Stock Exchange Group, Alphabet and TSMC, positions whose catalysts for further value creation are primarily “AI-driven”. We also see the energy transition and growth in data centers affecting scores of industrial, materials and energy companies as demand for infrastructure and certain commodities surges.”
Methodology
For this article we scanned Third Point’s Q1 portfolio and picked the fund’s top large-cap stock holdings. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7. Gartner Inc (NYSE:IT)
Billionaire Dan Loeb Q1’2024 Stake Value: $26,216,850
Market data research company Gartner Inc (NYSE:IT) is one of the stocks billionaire Dan Loeb picked up for his portfolio in the first quarter. The stock is up about 28% so far this year. Third Point owns a $26 million stake in Gartner Inc (NYSE:IT). In April, Gartner Inc (NYSE:IT) beat Q1 EPS estimates, but the stock fell amid a decline in revenue and research contract value [RCV]. However, Gartner Inc (NYSE:IT) bulls believe the company was already anticipating lower RCV as new business sales in the first quarter are usually slow.
Gartner Inc (NYSE:IT) in Q1 earnings call talked in detailed about guidance and expectations:
“We expect Research revenue of at least $5.115 billion, which is FX-neutral growth of about 5%. First quarter results were about in line with our expectations. We updated for the stronger dollar. We expect Conferences revenue of at least $560 million, which is FX-neutral growth of about 11%. We expect Consulting revenue of at least $525 million, which is growth of about 3% FX neutral. The result is an outlook for consolidated revenue of at least $6.2 billion which is FX-neutral growth of 5%. We now expect full year EBITDA of at least $1.455 billion, up $35 million from our GAAP prior guidance before the effect of a stronger dollar. We expect typical operating expense seasonality to continue through the rest of the year.
We now expect 2024 adjusted EPS of at least $10.90. For 2024, we now expect free cash flow of at least $1.08 billion, up $15 million from our prior guidance. The higher free cash flow reflects a conversion from GAAP net income of 139%. Our guidance is based on 79 million fully diluted weighted average shares outstanding, which reflects the repurchases made through the end of March. And finally, for the second quarter, we expect adjusted EBITDA of at least $390 million.”
Read the full earnings call transcript here.
Baron Asset Fund stated the following regarding Gartner, Inc. (NYSE:IT) in its first quarter 2024 investor letter:
“Shares of Gartner, Inc. (NYSE:IT), the leading provider of syndicated research to the IT sector, contributed to performance. Fourth quarter financial results were mixed, with declines in net income and EPS. However, solid increases in contract value and strong full-year performance, including a 9% increase in net income and an 11% rise in diluted EPS, helped boost the company’s share price. In addition, a 19% increase in free cash flow for the quarter and 6% for the full year underscored Gartner’s operational efficiency. Gartner’s core subscription research businesses compounded at attractive rates, and we believe growth is poised to accelerate. We think Gartner will emerge as a key decision support resource for every company evaluating the opportunities and risks of AI on its business, providing a tailwind to volume growth and pricing realization. We expect Gartner’s sustained revenue growth and focus on cost control to drive continued margin expansion and enhanced free-cash-flow generation. The company’s balance sheet is in excellent shape and can support aggressive repurchases and bolt-on acquisitions, in our view.”
6. Goldman Sachs Group Inc (NYSE:GS)
Billionaire Dan Loeb Q1’2024 Stake Value: $104,422,500
Billionaire Dan Loeb had exited his position in Goldman Sachs Group Inc (NYSE:GS) in early 2017. However, he came back to the stock in the first quarter of this year, buying 250,000 shares of the financial services giant, worth over $104.4 million. Over the past one year Goldman Sachs Group Inc (NYSE:GS) shares have jumped about 39%.
Last month, BofA published its updated list of US-1 stocks. These are the Buy-rate stocks which are the top picks of BofA. The firm recommends these stocks for “superior investment performance” over the long term. Goldman Sachs Group Inc (NYSE:GS) was part of the list.
Goldman Sachs Group Inc (NYSE:GS) is a strong dividend-paying stock, as the bank has increased its dividend every year since 2010.
Of the 919 hedge funds tracked by Insider Monkey, 72 hedge funds reported owning stakes in Goldman Sachs Group Inc (NYSE:GS). The biggest stake in Goldman Sachs Group Inc (NYSE:GS) is owned by Ken Fisher’s Fisher Asset Management which owns a $2.4 billion stake in Goldman Sachs Group Inc (NYSE:GS).
5. Marvell Technology Inc. (NASDAQ:MRVL)
Billionaire Dan Loeb Q1’2024 Stake Value: $108,001,263
Billionaire Dan Loeb piled into semiconductor company Marvell Technology Inc. (NASDAQ:MRVL) during the first quarter, buying 1.5 million shares of Marvell Technology Inc. (NASDAQ:MRVL), worth over $108 million. Citi analyst Christopher Danely earlier this month talked about several AI semiconductor stocks he’s bullish on. Marvell Technology Inc. (NASDAQ:MRVL) is one of these stocks.
Of the 919 hedge funds tracked by Insider Monkey, 87 hedge funds reported owning stakes in Marvell Technology Inc. (NASDAQ:MRVL) as of the end of the March quarter, up from 53 hedge funds in the previous quarter. This shows a significant jump in hedge fund sentiment for Marvell Technology Inc. (NASDAQ:MRVL), as hedge funds flock to AI stocks to maximize their profits.
Analysts believe that Marvell Technology Inc. (NASDAQ:MRVL) could be the next major AI play as Marvell Technology Inc. (NASDAQ:MRVL) begins to roll out AI-specific products like Spica™ 800G PAM4 DSP platform for optical interconnects. Marvell Technology Inc. (NASDAQ:MRVL) also sells Application-specific integrated circuits (ASICs) for data centers, which are seeing a huge boost amid the AI revolution.
According to data compiled by Yahoo Finance, average Wall Street price target for Marvell Technology Inc. (NASDAQ:MRVL) is $87.7, which represents a 14% upside potential from the current levels.
