Third Point's Portfolio: Still Net Long Distressed Debt and MBS

Includes: CIT, DAN, DPH, F, PHH, QVCA
by: Market Folly

Dan Loeb's hedge fund recently sent out its performance update for its Offshore fund and in it we saw its latest exposure levels and top positions. Earlier today we learned that Third Point was up 15.58% for the year in our batch of first quarter 2010 hedge fund performance numbers. Third Point was up 8.1% in March alone and had a solid month. Its $1.74 billion Offshore fund's cumulative performance is an astonishing 859% with annual standard deviation of 13.8% a correlation to the S&P of 0.39 and a Sharpe Ratio of 1.30, rounding out an impressive set of statistics. To learn to be a great investor like that, we point to Dan Loeb's recommended reading list.

Let's next check in on Third Point's exposure levels. In equities, Third Point is net long consumer names at 12.2%, financials at 13.1%, and healthcare at 8.2%. The hedge fund is ever so slightly net short the market indices and energy. In credit, Third Point is net long distressed at 31.3%, Performing at 13.5%, and mortgage backed securities - MBS at 19.2%. The positive performance as of late can be attributed to Third Point's financial plays in equities and its distressed credit plays. Other exposure levels include a 6.5% net exposure to risk arbitrage and a 7.4% exposure to privates. In terms of geographic exposure, Loeb's hedge fund is net long America by 107%, net long Europe by 20% and neutral in Asia.

Third Point's top positions are as follows and keep in mind that the fund owns multiple securities in all of these companies so it's not just simply an equity position or a debt position. Unfortunately, there is no further breakdown as to specifics:

- Chrysler
- Delphi Corp (DPH)
- CIT Group (NYSE:CIT)
- Dana Holding Corp (NYSE:DAN)

So, Third Point still owns many of the names we saw referenced in its investor letter. Loeb's hedge fund also made note of some of its top winners and losers. Many of Third Point's losing stakes were un-named short positions which is understandable given the fact that the market doesn't seem to want to go down. The hedge fund also lost on its Gartmore Group Ltd and Ford (NYSE:F) (multiple securities) positions. Its top winners include: PHH Corp, Delphi, Chrysler, SemCrude LP (multiple securities) and Liberty Media Corp Interactive (LINTA). In terms of new portfolio activity, we saw Third Point recently updated two positions and then reduced a position.

That wraps it up. To learn to invest like this fund manager, we defer you to Dan Loeb's recommended reading list. We'll continue to check in on Third Point each month to provide you updates. In the mean time, for more information you can head to Third Point's commentary, as well as our look at its equity portfolio.

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