Hedge Fund Tracking: Daniel Loeb's Third Point - 13F Filing Q3 2008 ~ market folly

Thursday, December 4, 2008

Hedge Fund Tracking: Daniel Loeb's Third Point - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered Timothy Barakett's Atticus Capital,Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Bret Barakett's Tremblant Capital, John Paulson's Paulson & Co, and David Einhorn's Greenlight Capital. We've also already covered a few of the 'Tiger Cub' portfolios in our hedge fund tracking series, including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, and John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Next up, we have Daniel Loeb's Third Point LLC. Third Point is a $4.5 billion activist and value based hedge fund. While Third Point is technically an activist fund, Loeb often has numerous passive investments as well. Loeb's firm was -10.3% for October and is now -26.9% year-to-date, which we noted in our October hedge fund performance update. Before beginning, its probably worthwhile to see Third Point's 2nd quarter portfolio update, so you can get a sense as to what positions they're building as core holdings.

The following were Third Point's long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that they initiated in the last quarter):
Dr Pepper Snapple (DPS)
Lorillard (LO)
Anheuser Busch (BUD)
Rohm & Haas (ROH)
CVS Caremark (CVS)
Hewlett Packard (HPQ)
Wendys (WEN)
Epicor Software (EPIC)
Verigy (VRGY)
Dineequity (DIN)
Merrill Lynch (MER)
Heckmann Corp WTS (HEK-WS)
Epicor Software Corp (EPIC) 2.375% Note 5/1
Heckmann Corp (HEK)
Amedisys Inc (AMED) Puts
EDCI Holdings (EDCI)
Stream Global (OOO-WS)
JB Hunt (JBHT)
Avi Biopharma (AVII)
Citigroup (C) Puts

Added to (Positions they already owned but added shares to)
Orient Express Hotels (OEH): Increased by 242%
Telephone and Data (TDS): Increased by 168%
Tibco Software (TIBX): Increased by 103%
Teradata (TDC): Increased by 74%
Phoenix Companies (PNX): Increased by 58%
Exco Resources (XCO): Increased by 49%
Target (TGT): Increased by 19%

Some Reduced Positions (Positions they sold some shares of - note not all sales listed)
Covidien (COV): Reduced position by 67%
Enpro (NPO): Reduced position by 55%
Plains Exploration (PXP): Reduced position by 44%
Time Warner (TWX): Reduced position by 44%
Meadwestvaco (MWV): Reduced position by 42%
GLG Partners (GLG): Reduced position by 36%
American Eagle Outfitters (AEO): Reduced position by 35%
Leap Wireless (LEAP): Reduced position by 31%
Flow International (FLOW): Reduced position by 15.6%

Removed Positions (Positions they sold out of completely)
Mastercard (MA)
Clear Channel (CCO)
Questar (STR)
Microsoft (MSFT)
BHP Billiton (BHP)
Energy XXI (EXXI)
Public Service Enterprise (PEG)
AK Steel (AKS)
Sandridge (SD)
St Mary Land & Exploration (SM)
Petrohawk (HK)
Chesapeake (CHK)
Cabot (COG)
Canadian Natural Resources (CNQ)
Petroleo Brasileiro (PBR)
Horsehead (ZINC)
Safeway (SWY)
Global BPO Services Corp (OOO.U)
Comstock (CRK)
XTO Energy (XTO)
Starwood (HOT)
Orion Marine (OMGI)
American Superconductor (AMSC)
Sirf Technology (SIRF)
Motorcar Parts (MPAA)
Abraxas Petroleum (AXAS)
Nustar Group (NSH)
Loral Space and Comm (LORL)
Entertainment Dist Co
Massey Energy (MEE)

Top 20 Holdings (by % of portfolio)

  1. Exco (XCO): 6.6% of portfolio
  2. Dr Pepper Snapple (DPS): 5.4% of portfolio
  3. Phoenix Companies (PNX): 5% of portfolio
  4. Plains Exploration (PXP): 4.9% of portfolio
  5. Lorillard (LO): 4.7% of portfolio
  6. Teradata (TDC): 4.7% of portfolio
  7. Leap Wireless (LEAP): 4.1% of portfolio
  8. Time Warner (TWX): 3.8% of portfolio
  9. Tibco Software (TIBX): 3.3% of portfolio
  10. SPDR S&P 500 (SPY): 3.2% of portfolio
  11. Anheuser Busch (BUD): 3.1% of portfolio
  12. Telephone and Data (TDS): 3% of portfolio
  13. American Eagle (AEO): 3% of portfolio
  14. Rohm & Haas (ROH): 2.96% of portfolio
  15. Liberty Acq Holdings (LIA-U): 2.95% of portfolio
  16. Thompson Creek Metals (TC): 2.5% of portfolio
  17. Orient Express Hotels (OEH): 2.2% of portfolio
  18. Meadwestvaco (MWV): 2% of portfolio
  19. CVS Caremark (CVS): 2% of portfolio
  20. Nabi Biopharma (NABI): 1.9% of portfolio

Assets from the collective holdings above were $3.89 billion last quarter and were $1.66 billion this quarter. Numerous funds we track are now showing holdings in Lorillard (LO), including Lone Pine Capital and Maverick Capital. Additionally, Third Point is now the third value oriented fund we've seen in Teradata (TDC). Stephen Mandel's Lone Pine has a sizable position in TDC, as does David Einhorn's Greenlight Capital. Another point of interest is Loeb selling completely out of Mastercard (MA), while legendary investor Julian Robertson was recently buying MA. Lastly, Loeb joins hedge fund Paulson & Co in arbitrage plays such as ROH and BUD. Please note that we have not detailed every single change to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect the cash or short portions of their portfolio. This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co and David Einhorn's Greenlight Capital. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Loeb & Third Point:
- Third Point's 2nd quarter portfolio update
- October hedge fund performance update
- Hedge Fund Rankings

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