The Morning Brief: Dan Loeb’s Third Point Posts Strong Gains in February

March 03, 2017   Stephen Taub

The multistrategy manager's wins came from the long side of its portfolio.

Dan Loeb’s Third Point has gotten off to a strong start this year. The multistrategy manager’s Third Point Offshore fund, which sometimes takes high-profile stakes in activist targets, posted a 2.2 percent gain in February. As a result, it is now up 4.9 percent for the year. Still this is short of the 5.9 percent gain posted by the Standard & Poor’s 500 stock index over the first two months.

February results were driven exclusively on the long side. The fund’s long equity book returned 2.9 percent, while the short equity book lost 0.6 percent. The long credit book climbed 0.5 percent, offset by a 0.1 percent loss on the short side. Its undefined group of strategies that comprise its "other" category lost 0.5 percent altogether.

Entering March, Third Point’s equity book was 63.8 percent net long, up from 57.2 percent at the end of January and 58.3 percent at year-end. Earlier in the week, we reported that Third Point sold a little more than 5.9 million shares of Baxter International on February 28 in a block trade for $50.35 a share, reducing its stake to 8.5 percent. In a regulatory filing, Loeb said the decision to sell the shares "was a result of portfolio management discussions," noting the stock "had approached concentration limit guidelines" due to significant appreciation in the stock since its original investment.

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A number of hedge funds are cheering the successful first day of trading of social media company Snap. The shares finished up more than 44 percent, to close at $24.51. Among the investors who are counting healthy paper gains are Paul Hudson’s Glade Brook Capital Partners, which in the past few years has launched several funds that either solely invest in Snap or invest in Snap and a handful of other private companies; Stephen Mandel Jr.’s Lone Pine Capital; Philippe Laffont’s Coatue Management; and James (Jamie) Dinan’s York Capital Management.

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Och-Ziff Capital Management Group suffered another $100 million in redemptions in February, according to a person with knowledge of the situation. This was more than offset, however, by performance gains, resulting in a $100 million increase in total assets last month, to $33.7 billion. In February, the multistrategy firm’s flagship fund, OZ Master Fund, was up about 1 percent, expanding its gain for the year to 3.12 percent. OZ Asia Master Fund returned 2.53 last month and is now up 4.93 percent for the year. On the other hand, OZ Europe Master Fund lost 0.24 percent in February, trimming its gain for the year to 1.75 percent.

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Shares of Caterpillar fell 4.30 percent, to $94.36, after reports that several of its offices were searched by federal officials. The Peoria Journal Star reported that "agents from an alphabet soup of federal agencies lined up outside" three different locations. The paper speculates the probe stems from a federal wrongful termination lawsuit over accounting and tax issues at the company. As we earlier reported, in its fourth quarter letter, David Einhorn’s Greenlight Capital revealed it was short Caterpillar’s stock.

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Bill Ackman’s Pershing Square Holdings, managed by his firm, Pershing Square Capital Management, has gotten off to its best start in three years. But it is not exactly atoning for the enormous losses it generated last year. The fund was up 0.6 percent in February and for the year.


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