NEW YORK, May 1 (Reuters) - Hedge fund Third Point owns

a "meaningful" stake in U.S. Steel and expects a merger

with Japanese rival Nippon Steel ( NISTF ) to go ahead.

Billionaire investor Daniel Loeb told investors in a letter

seen by Reuters that the firm believes U.S. Steel "will complete

a planned merger with Nippon Steel ( NISTF ) based on the industrial logic

of the combination."

Third Point's stake has not been previously disclosed and

comes at a time investors are trying to game out what lies ahead

for the planned merger.

Loeb also said that Third Point sees new investment

opportunities in credit markets that have been rocked by

reaction to Trump administration policies, and had raised its

investment in event-driven, activist and risk arbitrage

positions that he expects to perform well in choppier market

conditions.

While the Biden administration earlier in the year blocked

the deal between the two steel companies, U.S. President Donald

Trump last month ordered a new national security review, raising

hopes some kind of deal may still be worked out.

Loeb wrote that a U.S. Steel tie up with Nippon would also

have "benefits to 'America First' re-industrialization plans."

Third Point is also building a position in consumer

healthcare company Kenvue ( KVUE ), which already has other

activist investors pushing for changes, including some possible

divestments or even a sale of the entire company.