london aug 1 reuters  billionaire investor daniel loeb has reduced the size of short bets on single named companies to limit the vulnerability of his hedge fund third point to short squeezes he said in a letter on tuesday the shortselling environment is much more challenging than it has been historically said loeb in the letter analysing a companys economic prospects has taken a backseat to watching reddit message boards and options expiries the letter said a short squeeze occurs when a stock price rises so much that bearish bets become too expensive to hold and investors are forced to buy them back sometimes at a loss loeb who runs third point  which had around 126 billion in assets under management at endfebruary  said his top five winners this quarter included utility pacific gas and electric pcgpaa  tech companies microsoft msfto  amazon amzno and alphabet googlo as well as and plumbing and heating product ferguson fergl  loeb said his worstperforming stocks for the quarter were the tech alibaba group holding 9988hk  bioprocessing company danaher dhrn  catalent ctltn  international flavors  fragrances and an undisclosed private position the nine companies did not immediately return a request for comment the third point offshore fund returned 11 for the quarter but was still down 3 for the year through june 30 according to the letter almost half of loebs net long exposure includes companies that will benefit from developments in artificial intelligence the letter said ai will need more plumbing to power programmes like chat gpt4 as it gets better at gathering and learning on data and then spitting out answers the letter said this will benefit the biggest providers of cloudbased software which outsource servers and storage like microsoft azure amazon web services and google cloud platform it said elsewhere at third point loebs corporate credit team returned a net 87 for the quarter after market instability in the march banking crisis created opportunities for the fund loeb said loebs residential mortgage and structured credit portfolios are both up a net 32 and 41 for the year so far the letter said