Billionaire Dan Loeb Sold Third Point’s Entire Stake in Meta Platforms and Has Piled Into a Market Leader Whose Addressable Market Can 25X in a Decade

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During each quarter, staying informed about significant news events that could impact the market can be quite demanding for investors, as this period includes earnings reports from influential companies (lasting approximately six weeks), economic data releases, and updates from the Trump administration. It’s not uncommon for important pieces of information to get overlooked amidst all this activity.

One important piece of data that some investors may have missed is the deadline on May 15th for institutional investors managing over $100 million to submit Form 13F to the Securities and Exchange Commission. This form must be submitted within 45 days of the end of a quarter, and it offers a clear overview of which stocks the leading asset managers have been buying or selling during that period.

13F filings, despite their limitations such as providing an outdated picture for highly active hedge funds, are indispensable tools for investors, enabling them to discern the investment focus and prevailing trends that capture the interest of successful fund managers.

Instead of always watching billionaire Warren Buffett closely to see his moves, it should be noted that there are other wealthy investors like Dan Loeb from Third Point who are also known for seizing investment opportunities.

In the final quarter of March, the wealthy head of Third Point made two intriguing transactions in the artificial intelligence sector. He liquidated the entire position held by his fund in Meta Platforms (META), and significantly increased holdings in a clear leader in AI, whose market could theoretically expand 25 times over a decade-long period.

Billionaire Dan Loeb’s Third Point logs out of Meta

According to Third Point’s 13F filing, Loeb divested from nine different positions during the first quarter, and one notable departure was from Meta Platforms, the social media giant. By the end of 2024, Loeb decided to sell all 665,000 shares that were previously owned.

It’s quite plausible that the sale was simply a chance for Third Point’s billionaire leader, Loeb, to realize profits. Typically, Loeb’s fund keeps its investments for approximately 13 months or so, and Third Point acquired its Meta shares during Q3 of 2023. Given that Meta’s stock nearly doubled in value since then, it made perfect sense for Loeb to sell off his holdings.

Could it be that there was something more sinister motivating the sale, rather than simple profit-making?

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A worry exists about the possibility of the U.S. economy experiencing a recession. While the New York Federal Reserve’s recession probability gauge currently predicts a 28.7% likelihood of a recession happening by June 2026, it has a remarkable ability to forecast economic downturns when this probability surpasses 32%. This threshold was crossed in 2023 and 2024. Noteworthy is that the New York Fed’s recession indicator gave a false warning in October 1966.

In contrast to many other stocks, Meta may experience a greater negative effect during economic downturns because nearly all of its revenue comes from advertising. When hard times hit, companies often cut back on their marketing expenses.

It’s also plausible that Dan Loeb had doubts about Meta’s stock performance in the future due to Mark Zuckerberg’s intentions to invest heavily in AI-related data center infrastructure. Although Zuckerberg has an impressive history of launching innovative products and timing their monetization perfectly, he has consistently increased his company’s estimated capital expenditures (capex). Meta’s predicted capex for 2025 ranges between $64 billion and $72 billion, which represents a $5.5 billion increase at the midpoint from the previous forecast.

Given the high cost associated with the overall stock market, both Wall Street and investors exhibit minimal patience for errors. The move by Meta Platforms to invest significantly more in AI infrastructure than previously anticipated may lead to dissatisfaction if the results do not meet expectations.

Although I understand Dan Loeb’s decision to secure his earnings, I think he might eventually feel remorseful about leaving this investment when reflecting on it years down the line.

Third Point’s billionaire investor scooped up shares of a hypergrowth stock

Without considering other choices, it is noteworthy that Dan Loeb, a billionaire, established 10 new investments as per Third Point’s 13F filing from the March quarter. Among these, Nvidia (NVDA) stands out the most, given its significant role in the ongoing AI revolution.

In the initial three months, Loeb acquired approximately 1.45 million shares of Nvidia. This is the first instance that his fund has owned stocks from this AI pioneer since the second quarter of 2023.

It’s clear that the impact of artificial intelligence (AI) as a technology is truly extraordinary. AI-powered software and systems can make lightning-fast decisions autonomously, which is transformative across numerous industries globally. According to projections by UN Trade and Development, the worldwide AI market is expected to soar from its current $189 billion in 2023 to an astounding $4.8 trillion by 2033. This represents a 25-fold growth within just ten years, for those who wish to follow along.

The fact that Nvidia has become the largest publicly traded company on Wall Street demonstrates the immense influence of their Hopper and Blackwell graphics processing units (GPUs) in AI-enhanced data centers. Given that the demand for AI-compatible GPUs far surpasses their production, Nvidia has profited by both increasing its GPU sales year over year and charging a premium (over 100%) compared to its direct competitors in the market. Consequently, it’s no surprise that Nvidia’s gross margin has increased as the AI revolution progresses.

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It seems possible that Daniel Loeb, a prominent investor at Third Point, is equally enthusiastic about Nvidia’s anticipated pace of innovation. According to Jensen Huang, the CEO, they aim to launch a cutting-edge AI chip every year. Assuming everything goes as planned, we can expect the Blackwell Ultra (2025), Vera Rubin (2026), and Vera Rubin Ultra (2027) to succeed Hopper and Blackwell. The significant takeaway is that Nvidia’s computing edge seems unmatched by others in the industry.

Another significant factor contributing to Nvidia’s continued success is its top-tier CUDA software platform. This tool is crucial for developers looking to fully leverage the computational capabilities of their Nvidia graphics processors, as well as create and train extensive language models. Remarkably, CUDA has been instrumental in maintaining customer loyalty towards Nvidia’s product and service ecosystem by delivering exceptional performance.

What’s particularly intriguing about this purchase is its timing. For over three decades, every major innovation has gone through an early-stage bursting bubble event. While artificial intelligence holds great potential, many businesses have yet to fully optimize their AI solutions. Given that AI seems to be the next in line for a bubble, Nvidia’s stock may eventually collapse.

Loeb’s purchase is intriguing because it enters the rapidly expanding AI sector where competition is booming. While most investors focus on external competition, the main challenge for Nvidia might stem from within. A significant portion of its top sales-generating customers are developing their own AI-GPUs for their data centers. Although these chips lag behind Nvidia’s hardware in terms of computational power, they offer a more affordable price and easier availability. They help alleviate the shortage of AI-GPUs, diminish Nvidia’s pricing leverage, erode its profit margins, and potentially limit future growth opportunities in data centers powered by AI-accelerated technology.

As an observer, I can’t help but speculate that this might just be a brief transaction, tailored to Third Point’s leader.

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2025-07-23 11:27