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Third Point’s Daniel Loeb believes the odds are rising that former President Donald Trump will win the U.S. presidency this November over Vice President Kamala Harris, and the influential hedge fund manager is increasing positions that would benefit under a Republican administration and Congress. “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,” wrote Loeb in a letter to investors obtained by CNBC. “We believe the proposed ‘America First’ policy’s tariffs will increase domestic manufacturing, infrastructure spending, and prices of certain materials and commodities … a reduction in regulation generally and especially in the activist antitrust stance of the Biden-Harris administration will unleash productivity and a wave of corporate activity.” Polls show that it is still going to be a tight race this November, with a recent NBC News poll showing that the Republican nominee and Vice President Kamala Harris are deadlocked . But Loeb in his quarterly missive said he was increasing both “stock and option purchases” to bet on the Trump-win scenario. Loeb is not alone on Wall Street in making those bets, with JPMorgan most recently highlighting gains in bank stocks and the U.S. dollar as signs more investors see a Republican win. Some companies highlighted by Loeb as winners for the fund in the third quarter could benefit from deregulation and increased domestic manufacturing under Trump, notably utility PG & E , nuclear power play Vistra and conglomerate Danaher . Alphabet — a company that has come under fire from the Biden administration for violating antitrust laws and which Loeb also owns — could also benefit. Additionally, Loeb believes Republicans will establish a majority in the Senate, no matter the outcome of the presidential race, and so that limits the downside for these stocks even if Harris wins. His note comes as Third Point Offshore has underperformed the S & P 500 this year, seeing year-to-date returns net of fees of 14% compared to the broad market’s nearly 23% gain. The fund gained 4% last quarter, according to the letter, also trailing the market. Loeb implies his fund has been hurt in the short term because it holds extensive holdings away from large-cap technology stocks, which have been the stars of the narrow bull market. But he sees the improvement in market breadth that began in the third quarter continuing, especially under a Republican administration. Overall, the U.S. economy is in good shape, according to Loeb, as he sees “no evidence” of a recession coming up the pike. The manager also revealed that he added a position in the Danish freight company DSV. — Additional reporting by CNBC’s Scott Wapner.
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