Market-Beating Top Q3 Trades

Daniel Loeb has been one of the most successful money managers of the last two decades generating impressive returns that have been put him at number 240 on the Forbes top 400 wealth list.He is the founder and chief executive of the $11.9 billion Third Point LCC a hedge fund that has consistently outperformed average hedge fund portfolios and S&P 500 benchmarks.

At the end of the last quarter Third Point LLC reported year to date returns of 14.5% for its Offshore Fund and 23.0% for its Ultra Fund beating average hedge fund returns of 5.9% and S&P returns of 14.2% over the same period.His investment strategy entails shareholder activism which “employs a flexible, opportunistic investment style” and a “focus on delivering exceptional risk adjusted returns with limited market exposure.”

From 13F forms filed with the SEC we can now see the fund’s trades for the quarter ending September 30.  Notable moves include trades in some of the largest and best known tech companies such as Alibaba Group (NYSE:BABA), Alphabet Inc (Nasdaq:GOOGL), and Facebook Inc (Nasdaq:FB). These companies have all done well with recent quarterly profits beating expectations- so let’s take a closer look at these trades now:

Buys Alibaba Group (BABA)

In Q3 Third Point LLC increased their holdings in Chinese e-commerce giant Alibaba by 46.67% to $1.14 billion- now the fund’s second-largest holding. This turned out to a very wise move as Alibaba experienced a 54% increase in revenue in the last quarter. The stock’s revenue got a big boost on Singles’ day, a Chinese holiday created as an opportunity for single people to celebrate their independence by buying themselves a gift. This year Alibaba recorded massive sales of $25 billion in just 24 hours, easily beating its performance in previous years.

Overall the company has the double benefit of the increased strength of Chinese domestic spending and the growth in their cloud computing services. There is a strong buy consensus with all 18 analysts tracking the stock taking a buy position. The average analyst price target for BABA is $209.40 which suggests big upside of 13.29% from the current price of $184.90.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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