Third Point 2Q 2010 Letter
In the past, we have discussed Dan Loeb's hedge fund: Third Point. I have always enjoyed Loeb's commentary on the market and certain distressed debt positions (a place I know they enjoy to play). Below you will find their most recent letter, and below that some commentary from me. Enjoy!
Hunter Commentary
- Wow. Blames the market pullback on Goldman Sachs (disclosure: I am long the equity - actually bought it the day after the SEC investigation was announced). You know what: I tend to partially agree with this - It definitely left jitters in the market - I get daily runs from BNP with the title "CDS: Where we are since the GS annoyance" (see below). That being said, I do think the market ran way too hard into April and we were do for a pullback, no matter the catalyst.
- Agree with his point about spreading the "punitive" costs across the general population. The card program is just one example - The health care bill is of course the prime example.
- As many money managers have pointed out, its hard to invest when the rules are changing nearly EVERY SINGLE DAY.
- Commentary on corporate boards: Spot on. 8 times out of 10 I am disgusted when I read XYZ company's proxy.
- Third Point was short the for-profit education sector that has gotten annihilated recently.
- Lowest gross and net exposure since March 2009. Looking for ideas with hard catalysts (think emergence from bankruptcy...)
- Put in place some Baupost like 'blow up' hedges
- "...the sidelines is perhaps the most 'crowded trade.'" I have never thought about it like that but he is spot on
- Significant positions in post-reorg equities hurt performance during the quarter - still has "high convictions" in the names
- As he notes beautifully in the letter, post-reorg equities are sometimes referred to as "roach motels" - i.e. easy to get in and impossible to get out.
- Incredible discussion on REMICs and Re-REMICS, a place we are also invested. Something everyone should read. The upside/downside of the Alt A trades have been spectacular.
As always, an incredible read from Dan Loeb.
