If there’s one thing investors are never short of on Wall Street, it’s data. Trying to digest an onslaught of earnings reports each quarter, as well as near-daily economic data releases, can sometimes be overwhelming. It also makes it easy for something important to fall through the cracks.
For example, an argument can be made that the filing of Form 13F with the Securities and Exchange Commission no later than 45 calendar days following the end to a quarter is equally as important as earnings season. A 13F is a required filing by institutional investors with at least $100 million in assets under management (AUM) that details their buying and selling activity for the prior quarter.
For instance, Third Point’s billionaire chief Dan Loeb has rightly earned himself quite the following. Loeb is overseeing more than $6.5 billion in AUM and has demonstrated a knack for generating profits from a mix of small- and large-cap growth stocks.
Loeb’s trading activity during the March-ended quarter is particularly interesting. Though he added 11 new positions (10 of which are individual stock holdings) and completely exited nine stakes, it’s his approach with two of Wall Street’s most-influential businesses that stands out.
Perhaps the biggest surprise of Third Point’s first-quarter 13F is that all 500,000 shares of North America’s leading electric-vehicle (EV) manufacturer Tesla(NASDAQ: TSLA) were shown the door.
Interestingly, Loeb initiated his fund’s position in Tesla at some point during the third quarter of 2024. This was at a time when Tesla CEO Elon Musk was ramping up his support for then-candidate Donald Trump. Presumptively, if Trump were to win the presidency, it was expected to be a positive for Tesla. In the wake of Trump’s November victory, Tesla stock effectively doubled.
Thus, Loeb’s first-quarter exit might represent nothing more than a well-placed trade that was fueled by political puzzle pieces falling into place. With the average security in Third Point’s portfolio held for a little over 13 months, Dan Loeb has demonstrated a willingness to lock in gains.
However, there’s the realistic possibility that other factors played a role in sending shares of Tesla to the chopping block in the March-ended quarter.
For starters, Tesla’s EV segment isn’t performing well, with its vehicle margin enduring a two-year decline. Musk has previously noted that his company’s EV-pricing policy is dictated by demand. With competition ramping up and Tesla’s inventory climbing, it’s had no choice but to get more aggressive with its pricing. More than a half-dozen price cuts have weighed heavily on Tesla’s operating margin.
Another issue with Tesla has been the quality of its earnings. Although it’s been profitable for five consecutive years, a substantial portion of its pre-tax income has come from unsustainable sources, such as regulatory tax credits and interest income on its cash. Trump’s new tax and spending law, the One, Big, Beautiful Bill, will eliminate these regulatory credits for Tesla in the U.S.
Dan Loeb’s exit from Tesla might also be influenced by headwinds created by Elon Musk. Despite expanding his company’s revenue stream to include energy generation and storage, Musk has a lengthy track record of overpromising and underdelivering. Disappointing Cybertruck sales, a tame robotaxi launch in Austin, TX, and more than a decade of unfulfilled Level 5 autonomy promises suggest Tesla stock is being propped up on nothing more than false promises.
Lastly, Tesla’s valuation leaves no room for error. Even with stagnant sales expected in 2025, Musk’s company is commanding an inexplicable forward-year earnings multiple of 105.
Image source: Getty Images.
On the other end of the spectrum is a stock billionaire Dan Loeb is loading up on that, including dividends paid, has skyrocketed more than 420,000% since its initial public offering (IPO) in January 1999. Third Point’s 13F shows that Loeb scooped up 1,450,000 shares of Nvidia(NASDAQ: NVDA) in the March-ended quarter, which marks only the second time he’s ever owned shares of Wall Street’s artificial intelligence (AI) darling.
Nvidia didn’t become Wall Street’s largest publicly traded company, or tack on north of $3.5 trillion in market cap since the end of 2022, by accident. It accomplished this feat thanks to its an assortment of competitive advantages.
Nvidia’s sales growth — $27 billion in reported full-year sales in fiscal 2023 (ended January 2023) to an estimated $200 billion in full-year sales in fiscal 2026 (ended January 2026) — is a reflection of how dominant its graphics processing units (GPUs) are in enterprise data centers. Demand for the Hopper and successor Blackwell GPU architecture remain backlogged.
Despite the best efforts of Taiwan Semiconductor Manufacturing to rapidly expand its chip-on-wafer-on-substrate capacity, demand for AI-GPUs has continued to handily overwhelm their supply. This has allowed Nvidia to sell more AI-GPUs annually and to also charge a significant premium for its chips, relative to external competitors. AI-GPU scarcity helped lift Nvidia’s gross margin to a peak of 78.4% a little over one year ago.
Wall Street has also rewarded Nvidia for its continued investments in innovation. CEO Jensen Huang is attempting to bring a new AI-advanced chip to market annually, Following Blackwell, which debuted last year, will be Blackwell Ultra (2025), Vera Rubin (2026), and Vera Rubin Ultra (2027), if all goes according to plan. Introducing a new chip every year all but ensures that Nvidia’s hardware will retain its compute advantages.
The other factor that may have played a role in enticing Third Point’s billionaire investor to take the plunge is Nvidia’s first-quarter swoon. In addition to general stock market weakness caused by Trump’s tariff and trade policy, Nvidia stock swooned in January following the release of China-based DeepSeek’s R1 large language model chatbot. DeepSeek’s chatbot is claimed to have used cheaper and less-powerful Nvidia chips. These brief downturns for Nvidia stock lowered its forward-year earnings multiple and gave Loeb an opportunity to pounce.
But in spite of its success, Nvidia stock may still be in a bubble. Based on what history tells us, no next-big-thing technology has avoided a bubble-bursting event in over three decades. It’s going to take time for AI to mature as a technology, which leaves Nvidia exposed to the possibility of the AI bubble bursting.
The other major issue for Nvidia, beyond Trump’s tariff and trade policy, is the inevitable ramp in competition it’ll face. In particular, many of its largest customers by net sales are internally developing AI chips to use in their data centers. Even though this hardware is at no risk of externally competing with Nvidia’s AI-GPUs, it could cost Wall Street’s AI darling valuable data center space in the future, reduce AI-GPU scarcity, and delay upgrade cycles.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
