This is the third quarter 2009 edition of our hedge fund portfolio tracking series. If you're unfamiliar with tracking hedge fund movements or SEC filings, check out our series preface on hedge fund 13F filings.
Next up in our series is Dan Loeb's Third Point LLC. Third Point is a multi-billion dollar hedge fund that has seen annual returns greater than 15% since inception. Manager Dan Loeb focuses on event driven and value oriented investments and recently said he feels "like a kid in a candy store" due to all the distressed opportunities. In his past letter to investors, Loeb noted that he liked selective automotive debt plays. As noted in our hedge fund performance numbers post, Third Point was up 6.4% for August and 5.1% for September and were up 27.8% year-to-date at that time. For more market insight, definitely check out Dan Loeb's recommended reading list. Loeb started the fund back in 1995 with around $3.3 million in seed capital and today manages a multi-billion dollar portfolio. For some of his market insight and general thoughts on the industry, check out this video of a speech he gave.
Keep in mind that the positions listed below were Third Point's long equity, note, and options holdings as of September 30th, 2009 as filed with the SEC. We don't cover every single portfolio maneuver, as we instead focus on all the big moves. All holdings are common stock unless otherwise denoted.
Some New Positions (Brand new positions that they initiated last quarter):
Listed by their largest new stake first, and descending down
American Water Works (AWK)
First American (FAF)
Dana Holding (DAN)
Blockbuster B shares (BBI.B)
Loral Space & Communication (LORL)
Some Increased Positions (Positions they already owned but added shares to)
Schering Plough (SGP): Increased by 300% - inactive now due to buyout
Molson Coors (TAP): Increased by 45.5%
Pfizer (PFE): Increased by 40.7%
Pepsi Bottling Group (PBG): Increased by 33.3%
PepsiAmericas (PAS): Increased by 25%
Wyeth (WYE): Increased by 24% - inactive now due to buyout
Some Reduced Positions (Some positions they sold shares in)
Bank of America (BAC): Reduced by 54.9%
Phoenix Companies (PNX): Reduced by 7.3%
Flat Positions (Stakes with no change in amount of shares owned since Q2)
Ligand Pharma (LGND), Oracle (ORCL), Biofuel Energy (BIOF), Trian Acquisition (TUX), Greenlight Capital Re (GLRE), Lions Gate Entertainment (LGF), Liberty Acquisition (LIA), Liberty Media (LMDIA), Allergan (AGN), Hewlett Packard (HPQ), Anadarko Petroleum (APC), Apple (AAPL), PHH (PHH), Depomed (DEPO), and Nabi Biopharma (NABI).
Removed Positions (Positions they sold out of completely)
Sun Microsystems (JAVA)
Transatlantic Holdings (TRH)
Quest Communications (Q)
Legg Mason (LMI)
Maguire Properties (MPG) - we had covered them selling back in July
Guaranty Financial (GFGFQ)
Top 15 Holdings by percentage of assets reported on 13F filing
- Wyeth (WYE): 15.2% (inactive, bought out by Pfizer)
- PHH (PHH): 7.1%
- CF Industries (CF): 5.5%
- Liberty Acquisition (LIA): 5.2%
- Bank of America (BAC): 4%
- Popular (BPOP): 4%
- Transdigm (TDG): 3.9%
- HealthNet (HNT): 3.7%
- Molson Coors (TAP): 3.1%
- Pfizer (PFE): 3%
- Wellpoint (WLP): 3%
- Cablevision (CVC): 2.8%
- Depomed (DEPO): 2.3%
- Allergan (AGN): 2.2%
- Hewlett Packard (HPQ): 2.2%
Overall, the vast majority of changes in Dan Loeb's portfolio were via either buying completely new stakes, or selling out of holdings entirely. There were only a few partial adjustments to the portfolio. In terms of brand new stakes, their positions in Popular (BPOP), Transdigm (TDG), and Healthnet (HNT) were all pretty large as they landed in the top 10 of Third Point's long US equity portfolio. It's also worth highlighting that their new stakes in Wellpoint (WLP) and Cablevision (CVC) were not far behind in terms of size either.
Notable positions that they sold completely out of include Yahoo (YHOO) and Sun Microsystems (JAVA). Those positions had previously been their 6th and 7th largest US equity holdings when we covered Loeb's portfolio in Q2 of this year. One position they still hold onto but did sell some of was their large stake in Bank of America (BAC). They just started that position last quarter and in one of his past investor letters, Loeb mentioned BAC could see ~$3 per share in normalized earnings power. It is interesting though that he has already sold more than half of his position.
You'll note the vast increase in their Schering Plough stake, but keep in mind that the security is now inactive as it was bought out by Merck earlier on. So, it appears that Loeb and company were playing the arbitrage of that buyout. In another arbitrage play, Third Point boosted their holdings in Wyeth (WYE) as they were set to be bought by Pfizer (PFE). And speaking of Pfizer, Third Point also increased their stake there and it is notable seeing how David Einhorn of hedge fund Greenlight Capital is also very fond of PFE.
Overall though, not terribly too much to report on in terms of portfolio changes as they continue to play their event driven game. Keep in mind that Third Point also operates in the distressed arenas and we cannot see those portfolio holdings as the SEC only requires hedge funds to file on their equity, options, and note positions in US markets. We have already covered the fact that Loeb was seeing tons of opportunities in the distressed space a few months back. So, just realize that these equities are not representative of their entire portfolio. In terms of other recent activity of out Loeb's fund, they filed a 13G on Energy Partners (EPL) not too long ago which we also detailed.
Assets from the collective holdings reported to the SEC via 13F filing were $1.2 billion this quarter compared to $901 million last quarter, so an increase of around $299 million or so invested on the long side in US equities and notes. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. Realistically, the position percentages are more watered down in their actual hedge fund portfolio.
This is just one of the 40+ prominent funds that we'll be covering in our Q3 2009 hedge fund portfolio series. We've already covered Seth Klarman's Baupost Group, Bill Ackman's Pershing Square, and Stephen Mandel's Lone Pine Capital. Check back daily as we'll be posting up a new hedge fund's portfolio each morning.