Hedge funds piled up bets on financial stocks, Tesla stocks and prison operators in the third quarter ahead of rallies tied to Donald Trump's victory in the U.S. presidential election, according to filings.
Many of the bets came to be known as the Trump trade, a corner of the market that sometimes hinged on the Republican candidate's fortunes before the election and soared after victory.
Bridgewater Associates, Cortue Management, D1 Capital and others are among banks and other stocks that have soared since Election Day on hopes that a Trump victory would lead to deregulation of the financial industry, according to filings released Thursday. It is one of the companies that added financial stocks.
Bridgewater, founded by Ray Dalio, ended September with larger positions in Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon and Citigroup. He also took a new position at Bank of America.
The fund's largest dollar position was in Wells Fargo, with $79.6 million worth of stocks at the end of September.
The KBW Bank Index is up about 17% since the end of September and nearly 12% since the Nov. 5 vote.
It's unclear whether Bridgewater and the other funds held positions past the Sept. 30 deadline for 13-F filings. Although backward-looking, the filing is one of the few ways to see the portfolios of often secretive market participants such as hedge funds and sovereign wealth funds.
Other hedge funds betting on the banking sector include Dan Sundheim's D1 Capital Partners, which bought a new stake in Bank of America on Sept. 30, according to filings. acquired $174.9 million.
Coatue Management shed significant stakes in Meta Platforms and Nvidia, but built new stakes in the two investment companies. It purchased 2.7 million shares of KKR stock (worth about $355 million) and 195,969 shares of Blackstone stock (worth about $30 million).
Both Blackstone and KKR, which manage private equity funds, could benefit from a rebound in trading.
Some hedge funds have also taken positions in Tesla stock, which is seen as benefiting from Trump's close relationship with founder Elon Musk.
Tesla stock has soared more than 28% since Nov. 5, as Trump was the candidate backed by Elon Musk. The Tesla founder will lead the government's efficiency efforts.
Third Point added a new position of 400,000 shares in the EV maker, while Viking Global bought 436,272 shares. Cotu increased his stake in Tesla by 36.4% to 2.2 million shares, giving him a position worth $584.5 million at the end of September.
Third Point founder Daniel Loeb said in a letter to investors last month that he believes the Republican candidate is likely to win the election and is investing in his portfolio to capture a potential boom in corporate activity. He said that he is making adjustments.
Meanwhile, macro hedge fund Discovery Capital Management acquired a new position in Private Prison Geo Group with 387.1 million shares.
The company's stock has soared more than 84% since the election, as President Trump's promised crackdown on illegal immigration could increase demand for detention centers.
