Third Point sees more value in Amazon, likes some ‘old’ tech stocks

An Amazon logo is pictured on a vehicle as Extinction Rebellion activists protest outside Amazon’s fulfillment center in Altrincham, near Manchester, Britain November 26, 2021. REUTERS/Carl Recine

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BOSTON, Feb 16 (Reuters) – Hedge fund Third Point LLC said it added new positions and bolstered names it already had when markets sold off earlier this year and said Amazon is was at an “inflection point” which should lead to a rise. share price.

The New York-based company, whose investments are closely watched by rivals, also said some tech stocks often labeled as “old” tech like Intel “deserve a second look.”

Third Point, which oversees around $18 billion, has invested in Intel and Amazon for a while but said it had “significantly increased” the size of its investment in Amazon recently, betting the new management will move the company forward with new initiatives.

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Third Point founder, billionaire investor Daniel Loeb, wrote about the moves in a letter sent to shareholders on Wednesday evening and reviewed by Reuters.

Amazon’s outlook, valued at $1.6 trillion, was described in the letter as particularly bright, as Loeb expects some of the excess costs associated with the coronavirus pandemic, including labor shortages. labor and supply chain disruptions, disappear as the environment normalizes.

He wrote that he was happy to see Amazon’s board repurchase stock in January for the first time in a decade, and expects Amazon to begin returning more capital to shareholders.

Loeb also applauded the company’s decision to break down advertising revenue and itemize capital expenditure by category, calling the moves a “shareholder-friendly move” as the company’s new CEO, Andy Jassy, ​​makes his statement. Brand.

The letter called it rare for an investor to be able to buy a company like Amazon at a discount of 30% to 40% from what it should be worth before an expected surge in growth that should give Amazon “a run almost unlimited potential for growth in value.”

Amazon’s stock price surged during the pandemic in 2020 as people avoided shopping in stores, but rose less sharply last year, laying the groundwork for Third Point to strengthen its position.

In a call with investors held earlier today, Loeb said the market does not fully recognize the value of Amazon’s two businesses; e-commerce business and its Amazon Web Services cloud business, said a person familiar with the content of the call.

Third Point has also invested in IT services company Accenture and is betting its market share gains will “sustainably accelerate” amid growing demand for IT services and the shift to digital transformation.

Loeb also praised new Intel CEO Pat Gelsinger, who was appointed early last year after Third Point pushed for changes and said the company appears to have “turned the corner” with the return. talent, an improving product suite and a willingness to invest for growth. .

Last year, the company announced a 22.7% gain in the Third Point Offshore fund, even though the fund lost 5.2% in the last quarter.

Electric vehicle maker Rivian Automotive, which listed shares last year, was a big gainer in the last quarter and Third Point expanded its holdings when the share price fell below the price of $78 IPO.

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Reporting by Svea Herbst-Bayliss; edited by Richard Pullin and Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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