The month of May has been packed with pivotal data releases. We've had no shortage of earnings reports from influential businesses, a Federal Reserve Open Market Committee meeting, and countless updates on tariff and trade policy from President Donald Trump and his administration.
But amid this sea of data, perhaps nothing has been more telling than the filing of Form 13Fs with the Securities and Exchange Commission (SEC).
No later than 45 calendar days following the end to a quarter, institutional investors overseeing at least $100 million in assets under management (AUM) are required to file a 13F with the SEC. This filing allows professional and everyday investors to see which stocks and exchange-traded funds (ETFs) Wall Street's leading asset managers bought and sold in the most recent quarter. May 15 marked the filing deadline for 13Fs detailing trading activity for the March-ended quarter.
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Though Warren Buffett is the most-popular of all money managers, he's far from the only billionaire fund manager known for outsized investment returns. Third Point's billionaire chief Dan Loeb also has quite the following on Wall Street.
Loeb closed out the first frame of 2025 with $6.55 billion in AUM which was spread across 45 stocks. But what's particularly noteworthy about Loeb's investing style is his penchant for buying and selling high-growth and widely owned companies.
Based on Third Point's latest 13F, Dan Loeb completely kicked North America's electric-vehicle (EV) kingpin Tesla (TSLA -1.19%) to the curb and chose to pile into Wall Street's preeminent artificial intelligence (AI) stock.
Dan Loeb sent his fund's entire Tesla stake packing
Although Dan Loeb completely exited nine positions at Third Point during the first quarter, including social media colossus Meta Platforms, the sale of 500,000 shares of Tesla is what stands out most. The reason? Loeb initially purchased 400,000 shares of Tesla during the third quarter of 2024 and tacked on an additional 100,000 shares in the December-ended quarter. Between Jan. 1 and March 31, something changed.
This "something" could very well be Tesla's soaring share price. In the wake of President Donald Trump's victory in November and CEO Elon Musk being designated as a "special government employee" for the Department of Government Efficiency (DOGE), Tesla stock very briefly doubled. The average stock in Loeb's portfolio has an average hold time of a little over 13 months, so he's not shy about locking in profits.
But there may be more to this selling activity than meets the eye.
To begin with, there's growing concern that Musk's involvement with DOGE and his numerous other companies and projects are detracting from Tesla's growth potential. Despite continued sales growth from Tesla's energy generation and storage operations, EV revenue plunged 20% in the first quarter from the prior-year period.
Moreover, Tesla's vehicle margin has been trending lower for the last two years. Musk noted during his company's 2023 annual meeting that EV demand dictates pricing. A slew of sweeping price cuts for Tesla's fleet (Model's 3, S, X, and Y) confirms that competition is picking up and/or demand for EVs has waned. Even with steep price cuts, Tesla has struggled to keep its EV inventory levels from rising.
Another concern is that Tesla's earnings quality is poor. Companies with first-mover advantages should be generating their profits from their products and services. More than half of Tesla's pre-tax income can be traced to automotive regulatory credits, which are given to it for free by governments, and interest income earned on its cash. Without automotive regulatory credits, Tesla would have reported a pre-tax loss in the March-ended quarter.
Lastly, Dan Loeb might be out due to Elon Musk's numerous unfulfilled promises. For instance, Tesla's chief has claimed that Level 5 full self-driving is "one year away" for the last 11 years. He also expected 1 million robotaxis on American roadways "next year" in 2019. The cherry on top is that demand for Cybertruck has been well below the initial hype. If these unfulfilled promises are backed out of Tesla's valuation, its stock could have a long way to fall.
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Loeb is loading up on Wall Street's most direct AI beneficiary
On the other end of the spectrum, Third Point's 13F shows that Loeb opened 10 new positions during the first quarter. Though he did add a handful of high-yield dividend stocks, such as telecom titan AT&T and consumer health products company Kenvue, which isn't unexpected given the volatility we began witnessing in the stock market late in the first quarter, Loeb's eyebrow-raising purchase is premier AI stock Nvidia (NVDA -1.47%).
The last time Third Point's billionaire investor held shares of Nvidia for his fund was the second quarter of 2023. He then sold what's now the equivalent of 5,000,000 shares of Nvidia during the third quarter of 2023, which takes into account Nvidia's 10-for-1 stock split in June 2024. During the first quarter of 2025, Loeb scooped up 1,450,000 shares, which are currently valued at almost $196 million.
No company has been a more direct beneficiary of the AI revolution than Nvidia. Its Hopper graphics processing units (GPUs) and Blackwell GPU architecture are the undisputed preferred choice by businesses operating AI-accelerated data centers. Essentially, Nvidia's hardware is the brains behind generative AI solutions and the training of many large language models (LLMs).
Nvidia has also been able to take full advantage of AI-GPU scarcity. Even with world-leading chip fabrication company Taiwan Semiconductor Manufacturing ramping up its chip-on-wafer-on-substrate capacity, Nvidia can't come close to meeting the full demand for its hardware. When demand for a good overwhelms supply, it's perfectly normal the price of that good to climb. Both Nvidia's Hopper and Blackwell GPUs are commanding a premium to competing chips, which has been a benefit to the company's gross margin.
Even the CUDA software platform is doing its part to make Nvidia one of Wall Street's most-influential businesses. CUDA is the toolkit developers use to maximize the compute potential of their Nvidia GPUs, as well as build LLMs. More importantly, it's an anchoring tool that's helping to keep clients loyal to Nvidia's ecosystem of products and services.
The final piece of the puzzle for Loeb looks to be Nvidia's valuation, which has become considerably more palatable. During the tail-end of March, Nvidia's forward price-to-earnings (P/E) ratio dipped to around 19, which appears quite inexpensive given the growth rate it's been able to sustain.
But Nvidia stock isn't guaranteed to head higher. Every next-big-thing trend for more than three decades has worked its way through a bubble-bursting event early in its expansion. The simple fact that most businesses lack a well-defined AI game plan and aren't generating a profit on their AI investments signals that investors have, once again, overestimated the adoption rate and utility of another game-changing technology.
Competition is a genuine concern, as well. As both external and internal competition ramps up, AI-GPU scarcity will diminish. Ultimately, this is bad news for Nvidia's AI-GPU pricing power and its margins.
