Dan Loeb's Third Point: Latest Exposure Levels & Portfolio Breakdown ~ market folly

Friday, May 7, 2010

Dan Loeb's Third Point: Latest Exposure Levels & Portfolio Breakdown

Dan Loeb's hedge fund firm Third Point LLC has just recently disclosed their Offshore Fund's performance and we see that they were up 3.4% for the month of April and were up 19.2% for the year compared to the S&P 500 which was only up 7.1% for 2010 at the end of the month. Loeb's performance really speaks for itself as the Offshore Fund's annualized return is now 18.6% versus 5.2% for the S&P with a Sharpe Ratio of 1.31, a correlation to the S&P of only 0.39 and cumulative performance of 892%. We'll get into the latest portfolio metrics below, but if you wanted market commentary from Loeb, check out Third Point's investor letter.

In the latest portfolio breakdown, we get a glimpse as to Third Point's exposure levels as well. In equities, they were net long consumer names to the tune of 14.3% and net long financials 14.9%. They were net short the market indices & forex at -2.2%. Their total equity exposure levels were 64.5% long and -15.4% short leaving them 49.1% net long. This differs slightly from what we've seen from the majority of hedge funds who've been net long only 25% as they've been selling equities. We'll have to see if Loeb followed suit or not in next month's update.

On the credit side of things, Third Point Offshore was net long distressed to the tune of 30.3% and net long MBS at 18.9%. They have zero short exposure on the credit side of things. We've covered previously that Loeb was net long distressed debt and that trend clearly remains. In 'other' asset classes, Loeb's firm was net long risk arbitrage by 6.3% and net long privates by 5.7%. Lastly, looking at their geographic exposure, we see that Third Point's Offshore Fund is net long the Americas 103%, net long Europe 21% and net short Asia -1%.

Here are their current top positions and please keep in mind that they own multiple securities/asset classes in each name:

- Chrysler
- Delphi Corp
- CIT Group
- Dana Holding Corp
- PHH Corp

As you can see, there's a bunch of automotive names listed above and we highlighted back in August 2009 how Loeb favored select auto plays and obviously they've performed well over time. Third Point's top winners recently have been equity positions in Popular, Aspen Technology and Aveta. Their top losers have been equity stakes in WellPoint, HealthNet and Delta Lloyd NV. For more on their positions, we've also previously detailed Third Point's equity portfolio. That wraps up the latest monthly exposure levels and portfolio breakdown from Dan Loeb's Offshore Fund. To learn how to invest like this hedge fund manager, check out Dan Loeb's recommended reading.

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