Friday, November 01, 2013
As Third Point Does Well, Loeb to Return Money to Investors
Mr. Loeb, who started Third Point in 1995 with just $3.3 million in capital, told investors on Tuesday that its assets under management had grown to $14 billion, buoyed by strong performance from its flagship Partners fund and its Ultra fund.
The hedge fund will return around 10 percent of its capital by the end of the year, “in an effort to moderate this growth,” according to its Third Quarter Investor Letter reviewed by DealBook.
Third Point is following in the footsteps of some of the industry’s largest fund managers as they return money to investors or close their doors to new investors.
In April, Seth A. Klarman of Baupost told investors that he would return some of their money, “unless the opportunity set increases dramatically later this year.” It will be the second time in 31 years that Baupost has returned money to investors. Earlier this year, D.E. Shaw decided to stop taking new investors in its Oculus, Heliant and Composite funds.
Hedge funds have seen more than $45 billion of investor money flow into the industry this year, according to BarclayHedge and TrimTabs, yet their returns have continued to lag a soaring stock market in the United States.
Third Point, one of the industry’s top performers this year, has gained 18 percent in the first nine months of 2013, compared with a 19.8 percent gain on the Standard & Poor’s 500-stock index.
In his letter on Tuesday, Mr. Loeb also gave investors an update on some of Third Point’s recent investments.
Third Point bought a stake in Nokia over the third quarter after Microsoft announced it would acquire the Finnish mobile phone company for about $7.2 billion in an all-cash deal, Mr. Loeb said.
Citing an estimate that Nokia would be left with 8 billion euros of net cash following the transaction, he said “we expect a meaningful portion of the excess will be distributed to shareholders in coming quarters.”
Shares in Nokia rose 3.1 percent on Tuesday to $7.37.
Mr. Loeb also weighed in on Japan, where Third Point’s investment in Japanese equities “contributed significantly to 2013 returns.” Referring to a series of reforms under Prime Minister Shinzo Abe, Mr. Loeb said, “We believe Premier Abe has the best chance in over a generation to enact the reforms.”
“If he acts on these initiatives, we will be eager buyers of additional Japanese stocks,” he added.
Mr. Loeb, who has a reputation as an activist investor with a poison pen, did not mention some of his most recent activist campaigns.
Third Point’s bet on the Japanese giant Sony was absent from the letter. In June, Mr. Loeb sent a letter to Sony’s board, urging it to spin off part of its entertainment business. One month later, Mr. Loeb dialed down the tough tone and said he would continue to follow Sony’s progress and reassess his view before the company’s annual meeting next year. At the time, Third Point held a 7 percent stake in the company through ordinary stock and so-called cash-settled swaps.
Also absent from the investor letter was Mr. Loeb’s 9.3 percent investment in Sotheby’s.
On Oct. 2, Mr. Loeb called for the chief executive of the auction house to step down, accusing Sotheby’s of a “crisis of management” that has created “dysfunctional divisions.”
Posted by Bud Fox at 5:14 AM