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Third Point's Daniel Loeb is bullish because of easy policies. Here’s what he’s betting on

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Dan Loeb at 2014 WEF in Davos, Switzerland.
Justin Solomon | CNBC

Third Point's Dan Loeb nearly doubled the S&P 500's return in the first quarter, and the hedge fund manager is optimistic about more upside ahead amid supportive fiscal and monetary policies.

Loeb's flagship offshore fund returned 11% during the first three months of 2021, versus the 5.9% gain from the S&P 500, according to his latest investor letter obtained by CNBC. Third Point finished 2020 with a solid 20% return.

"As we move deeper into Q2, we remain constructive on the backdrop for risk assets. Financial conditions remain loose and policy, both monetary and fiscal, remains conducive," Loeb said in the letter. "We expect the Fed to remain focused on reinvigorating labor markets and expect investors to start debating the nature and timing of tapering well in advance of its actual implementation."

Wall Street has been fearful of a policy change from the Fed amid a pickup in inflation expectations, but that prospect diminished after April's jobs report showing a huge miss signaled a slower and uneven recovery ahead.

The hedge fund manager revealed his best performers that propelled a market-beating quarter.

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