Third Point Management, a New York-based investment advisor, released its second-quarter 2026 investor letter. A copy is available to download here. Third Point’s flagship Offshore Fund returned 7.7% in Q2 2026, outperforming the hedge fund index but trailing broader equity benchmarks. Second Quarter returns benefited from strong performance in semiconductors, memory, semiconductor equipment, power infrastructure, and aerospace sectors, with a 45% net exposure. Short book returned -5.1% net in the quarter, generating significant alpha against the S&P 500’s 15.2% rally, driven by declines in telecoms and financials. A June sell-off in AI infrastructure stocks, affecting memory, semiconductors, hyperscalers, and supply chains, appeared unrelated to fundamentals, economic trends, or geopolitics, with many stocks falling despite strong earnings. Additionally, its credit portfolios delivered modest gains; however, structured credit remained resilient. The firm remains focused on a balanced, conservative portfolio to manage risk amid volatility, enabling it to capitalize on opportunities and minimizing exposure to sudden market shifts. In addition, please check the Fund’s top five holdings to know the best picks in 2026.
In its Q2 2026 investor letter, Third Point Management highlighted Block, Inc. (NYSE:XYZ). Block, Inc. (NYSE:XYZ) is a US-based technology and financial services company that operates through platforms like Square and Cash App. On August 3, 2026, Block, Inc. (NYSE:XYZ) closed at $82.09 per share, reflecting a market capitalization of $48.85 billion. Block, Inc. (NYSE:XYZ) posted a one-month return of 5.84%, while its shares gained 9.03% over the past 52 weeks.
Third Point Management stated the following regarding Block, Inc. (NYSE:XYZ) in its Q2 2026 investor letter:
“We believe Block, Inc. (NYSE:XYZ) is entering one of the most important transitions in its history. For much of the past decade, the investment debate centered on Cash App’s ability to acquire users and scale engagement. In our view, that phase is largely complete. With nearly 60 million monthly transacting actives, Cash App has become one of the largest consumer financial platforms in the U.S. We see the next chapter as deeper monetization, and we believe the market is underestimating both the magnitude and the quality of that opportunity.
We view the key catalyst as Square Financial Services’ 2025 approval to originate Cash App Borrow nationwide. While seemingly incremental, we believe this fundamentally changes the economics of the business. In addition to materially expanding the number of eligible users, Block can now originate loans through its own licensed banking subsidiary rather than relying on third-party banks, giving it greater control over underwriting and pricing, while allowing it to retain a greater share of the product’s economics…” (Click here to read the full text)
Block, Inc. (NYSE:XYZ) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 63 hedge fund portfolios held Block, Inc. (NYSE:XYZ) at the end of the first quarter, the same as in the previous quarter. While we acknowledge the risk and potential of Block, Inc. (NYSE:XYZ) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Block, Inc. (NYSE:XYZ) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Block, Inc. (NYSE:XYZ) and shared a list of most promising fintech stocks to buy. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
