Hedge fund activist Daniel Loeb is worried about this market, cuts Netflix and exits Facebook

  • Daniel Loeb blamed his pessimistic market outlook on his expectations for a slowdown in U.S. economic activity over the next 12 months.
  • Third Point exited its stake in Facebook and cut its position in Netflix, according to a filing with the Securities and Exchange Commission.
Daniel Loeb, founder and chief executive officer of Third Point LLC
Jacob Kepler | Bloomberg | Getty Images
Daniel Loeb, founder and chief executive officer of Third Point LLC

Third Point's Daniel Loeb is concerned with current market conditions and told investors in a letter that he has significantly cut the firm's position in technology stocks.

The hedge fund fully dissolved its stake in social media giant Facebook and cut its position in Netflix by more than 33 percent, according to a filing at the Securities and Exchange Commission. According to the 13-F filing, Third Point had 1.3 million shares of Netflix as of the end of September.

The firm, however, upped its position in Microsoft to 4.1 million shares.

"While current U.S. growth remains above‐trend, helped by fiscal stimulus, this positive impulse is peaking now, and will combine with an increasing drag from tightening financial conditions," Loeb said in a letter dated Friday. "We have delevered our portfolio, reduced our tech exposure meaningfully, and grown our short book. We expect to be net sellers over the next few months if markets rally."

The firm exited its positions in Wynn Resorts and financial giant BlackRock.

Loeb, who also disclosed a new stake in American Express on Friday, blamed his pessimistic market outlook on his expectations for a slowdown in U.S. economic activity over the next 12 months.

"Current above‐trend growth will slow over the next year. Growth outside the US is tepid, driven by Chinese tightening still percolating through the system as markets wait for the country's recent stimulus to take effect," the fund manager added.

"The direction in 2019 will be driven by the interplay of slowing U.S. growth and the extent to which Chinese stimulus can lift non‐US growth," Loeb wrote. "Continued slowing seems more likely than reacceleration but the U.S. economy should grow at trend."

Founded in by Loeb in 1995, the New York hedge fund is currently fighting a heated proxy contest at Campbell Soup. It has approximately $18 billion in assets under management. The firm said its year-to-date gain through Sept. 30 was 0.6 percent against the S&P 500's 10.6 percent gain.

— CNBC's Leslie Picker contributed reporting.