Dan Loeb's Third Point Q3 Letter on AIG, Greek Government Bonds, Murphy Oil ~ market folly

Wednesday, October 3, 2012

Dan Loeb's Third Point Q3 Letter on AIG, Greek Government Bonds, Murphy Oil

Dan Loeb's hedge fund firm Third Point released its Q3 letter to investors today and in it they talk about how they've increased positions in high conviction ideas.

Third Point writes,

"Following an analysis of our performance for the past several years, we have both reduced our overall number of positions and increased the concentration of capital invested in our 'best ideas.'"

Long Greek Government Bonds

Loeb's firm, showing its street cred, quotes rapper Tupac Shakur in regards to their new position in Greek Government bonds which we posted about earlier today: "I'm tryin' to make a dolla outta fifteen cents."

Long Murphy Oil

Third Point originally bought in the second quarter and recently filed for approval to increase their position ("should we so desire").  The hedge fund looks for Murphy to take four steps to improve things:

1. Spin-off its retail business
2. Sell its Canadian Natural Gas assets
3. Sell its 5% stake in the Syncrude Oil Sands project
4. Complete UK refining business exit

Long AIG

Loeb originally purchased shares in March of this year as the government sold down its stake in the company.  As detailed in Third Point's most recent exposure report, AIG is their 2nd largest holding.

While they originally bought it under a 'forced selling' thesis, they quickly realized that the investment was actually a post-reorg equity with upside.  Third Point continued to buy AIG in the Treasury's offerings as well as in the open market.

Embedded below is Third Point's Q3 letter detailing their investment thesis on the above positions:

To learn more about this investor, Dan Loeb is profiled in the book: The Alpha Masters.

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