Third Point's Q4 Letter: Bullish on Financials ~ market folly

Thursday, February 2, 2017

Third Point's Q4 Letter: Bullish on Financials

Dan Loeb's hedge fund Third Point finished 2016 up 6.1%.  Third Point's fourth quarter letter outlines their bullish stance on markets, noting that de-regulation and tax decreases under various policies from President Donald Trump should spur US economic activity.

That said, they're still keeping an eye out on the potential for trade wars and/or inflation.

Particularly, they like financials and increased exposure to the sector in November and December: "We reallocated half our initial holdings from high-multiple, FCF businesses in payments, ratings, and P&C (which traditionally outperform during periods of deflation), to more traditional reflationary exposures in banks, brokers, and geographically, in Japan."

Third Point highlights that the bank stocks they're playing trade for less than 10x earnings with EPS growth in the high-teens.

Embedded below is Third Point's Q4 letter:

We've also posted up other letters today, so be sure to also check out Greenlight Capital's Q4 letter as well as Oaktree Capital's Howard Marks' latest memo.

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