Dan Loeb Discloses Anadarko Petroleum (APC) Position: Third Point Portfolio Update

Dan Loeb's hedge fund firm Third Point LLC is out with its July Offshore fund portfolio disclosure. For the month of July, the fund was up 3.2%. Year to date for 2010, the fund is up 13.7%. Third Point currently has an impressive 17.9% annualized return with a Sharpe Ratio of 1.25 and a correlation to the S&P 500 of 0.40. To learn to become a successful investor like this hedge fund manager, we'd obviously point you to Dan Loeb's recommended reading list.

In their latest portfolio breakdown, we see some changes worth highlighting. Here's a look at Third Point's top five positions:

1. Chrysler (multiple securities)
2. Delphi Corp (multiple securities)
3. CIT Group (multiple securities)
4. Dana Holding Corp (multiple securities)
5. Anadarko Petroleum (APC)

Keep in mind that 'multiple securities' simply means that they own numerous positions across the capital structure in that specific company and this list takes into account their collective position. Right away there are two major portfolio changes to notify you about. Firstly, Dan Loeb has started a brand new position in Anadarko Petroleum (APC) because it did not appear when we examined Third Point's Q1 portfolio. They've started this position presumably as shares have tumbled due to APC's partial operating stake in the deepwater rig responsible for the oil spill in the Gulf of Mexico. While BP (BP) has taken the majority of the blame for the spill, Anadarko owned a 25% interest and thus bears some liability.

This means that Loeb has joined the ranks of other prominent investors who have identified opportunity as a result of the Gulf oil spill. Just yesterday we highlighted Grey Owl Capital's purchase of Transocean (RIG). Prior to that, Whitney Tilson's T2 Partners bought BP (BP) as they feel the company will have no problem surviving. And although this next company was not directly involved in the spill, David Einhorn's Greenlight Capital purchased Ensco (ESV) as a result of the sector trading down.

The second portfolio change to highlight is in Third Point's PHH Corp (PHH) position. In previous portfolio disclosures, Loeb's hedge fund has listed PHH as one of their top 5 holdings (they owned multiple PHH securities). This time around, however, PHH is not listed in their top 5 positions. This leaves a few scenarios in play: Third Point could have sold part or all of their stake in PHH, or they could have raised their stake in other positions ahead of PHH (for instance their new stake in Anadarko). There's no way to know which scenario is the case and this could only be a minor change, but we'll have to wait to verify. PHH shares traded up 11% yesterday as the company reiterated its full year earnings outlook. In terms of other recent portfolio activity, we've highlighted Third Point's stake in Emmis Communications (EMMSP).

Let's next move to the top winners in their portfolio for July. These included their longs of Delphi (multiple securities), Atlas Pipeline (APL), Chrysler (multiple securities), Lyondell (LALLF), and an undisclosed short position. Of these stakes, you'll recall that Jamie Dinan of York Capital is bullish on Lyondell as well. Third Point's top losing positions for the month consisted of Gala Casino (multiple securities), SemCrude LP (multiple securities), Peregrine Metals (multiple securities) and two undisclosed short positions.

Next, let's focus on their latest exposure levels. In equities, Third Point is long 43.8%, short -12.1%, leaving them net long to the tune of 31.7%. Their largest sector net longs are in Consumer at 8%, Financials at 8%, and Basic Materials at 6%. In credit, Third Point is 50.6% net long with their largest exposure coming from MBS at 19.1%. Their distressed exposure comes in at 16.4% and their Performing exposure at 15.1%. Third Point has significantly reduced their distressed exposure as they were previously 25.1% net long and now are only 16.4% net long. Lastly, in terms of geographic exposure, Dan Loeb's hedge fund is net long the Americas at 84%, net long Europe at 13% and net short Asia at -1%.

Be sure to check out hedge fund manager Dan Loeb's recommended reading list, as well as Third Point's recent portfolio activity.

George Soros Adds Big To One Position, Sells More Of Another

George Soros' hedge fund firm has recently filed two separate 13G's with the SEC to update some of their positions. Firstly, we see that Soros Fund Management has disclosed a 5.26% ownership stake in Dana Holding Corp (DAN) with 7,331,132 shares. The filing was made due to activity on November 20th, 2009 and represents a massive increase in their position in DAN. As per their last 13F filing where they disclosed their positions as of September 30th, Soros owned only 1,500,000 shares of DAN. This means they have heavily boosted their equity stake in the past two months.

Additionally, we see that George Soros has also continued to sell down his stake in Global Ship Lease (GSL). His hedge fund now owns a 1.82% ownership stake in GSL with 864,500 shares as per an amended 13G filing with the SEC on November 24th, 2009. Do note that these shares are represented by warrants they own on GSL. Most recently, Soros Fund Management had a 7.45% ownership stake and before that a 13.66% ownership stake. They first sold their common shares and have now begun to sell the vast majority of their warrants. And as you can see, with only a 1.82% stake left, they are all but out of this name as they continue to sell down their position. You can check out our initial coverage of Soros' GSL position from back in early November.

This recent activity comes right after a portfolio update we did on Soros where he had adjusted three positions in his portfolio. As we've noted in our hedge fund news updates, Soros cautiously believes the market is overdue for a correction. He and many other fund managers have been expecting this for a while, yet the market continues to rally higher. More of Soros' thoughts on the financial markets are detailed in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.

Taken from Google Finance,

Dana Holding Corp is "a supplier of axle, driveshaft, structural, sealing and thermal products for global vehicle manufacturers. The Company designs and manufactures products for vehicle producer. It operates 113 major facilities worldwide. Dana serves three primary markets: automotive market; commercial vehicle market, and off-highway market. "

Global Ship Lease "acquires and charters vessels to container shipping companies. The Company was incorporated to acquire a fleet of containerships of diverse sizes."

Check back in as we'll soon be detailing George Soros' entire portfolio in our hedge fund portfolio tracking series.

Dan Loeb Sees Favorable Investing Environment: Third Point's Investor Letter

Dan Loeb's hedge fund firm Third Point LLC recently sent out their third quarter 2009 investor letter and we're here to provide you with the highlights. Third Point currently manages $2.4 billion and was up 19.8% for Q3 and year-to-date as of September 30th was up 27.6%, outperforming the S&P 500 over the same timeframes.

Loeb mentions that their biggest gainers were Delphi (now inactive), Dana Holding (DAN), Bank of America (BAC), Fortis, Popular (BPOP), and RMBS securities in their mortgage portfolio. We've long known of their BAC position as he detailed it in his past letter to investors. Interestingly enough, we see that Loeb saw nice gains from Dana Holding (DAN) and we also make note that George Soros' hedge fund recently filed a 13G on that company which we'll detail in a separate post.

Just recently we covered Loeb's portfolio and noted Popular (BPOP) was a large new position. His letter provides more clarity on their position as they bought preferred shares around $0.64 per share and converted them into common at an implied cost of $1.50 per share. They believe it is undervalued relative to its peers and is positioned well in Puerto Rico.

Given that Loeb and Third Point often focus on event driven and arbitrage plays, it's interesting to see them currently have close to no risk arbitrage positions. They had previously had in excess of 20% of their capital invested in these strategies. This is mostly due to the fact that the Pfizer/Wyeth and Merck/Schering mergers closed, two arbitrage situations that hedge funds were playing heavily.

Loeb's investment outlook for the next six to twelve months is 'favorable' in both the equity and debt markets. He thinks that interest rates will remain low as the government continues to fight unemployment and get us on the road to recovery. On a corporate level, he expects to see "anemic revenue growth but continued margin expansion, increased corporate restructuring activity (spin-offs, mergers, and the like), and earnings that will frequently surprise to the upside. Thus, for equity investors, it is a stock picker's market on both the long and short sides." To see what equity positions Third Point is currently investing in, we recently checked out their portfolio.

We've covered hedge fund Third Point in-depth in the past and have compiled some nice resources including Dan Loeb's recommended reading, a recent video speech by Dan Loeb, and Third Point's second quarter letter.

Embedded on this page below courtesy of Dealbreaker is Dan Loeb & Third Point's third quarter 2009 investor letter:



You can also download the .pdf here.