Third Point's January Report: Potash, Massey Helped Portfolio; Gold, Accuride Hurt

by: Market Folly

Dan Loeb's Third Point Offshore Fund recently released its January performance and the fund was up 3.9% for the month compared to a 2.4% return in the S&P 500. To date, Third Point has seen 18.9% annualized returns with a low correlation to the market (0.42).

Equity Exposure

In equities, Loeb's hedge fund has its highest net long exposure in basic materials at 16.4% net long. Its second highest exposure comes with a 12.9% net long position in the consumer sector. In total, Third Point is 68.9% long and -7.9% short, leaving the fund 61% net long.

Credit Exposure

Loeb is 31.1% net long credit with his largest exposure in mortgage backed securities (MBS) at 19.3% net long. He is also 12.3% net long distressed and -10.1% short Government bonds.

Top Positions

As of the end of January, Third Point's top positions remain unchanged from previous months:

  1. Gold (physical)

  2. Delphi (multiple securities held)

  3. Chrysler (multiple securities held)

  4. Potash (NYSE:POT)

  5. Lyondell Basell (NYSE:LYB)

Top Winners & Losers

Third Point's portfolio attributed positive performance in the month to shares of Potash (POT), Smurfit-Stone Container (NYSE:SSCC), Massey Energy (NYSE:MEE), NXP Semiconductor (NASDAQ:NXPI), and Aveta. We recently highlighted how Third Point opposes SSCC's takeover and other hedge funds have been active in the name as well. SSCC is one of the many post-reorganization equities found in Loeb's portfolio. Last year we cited how Third Point likes post-reorg equities and just recently we noted that John Paulson likes them too.

Regarding his position in NXP Semiconductor, Loeb highlighted NXPI in a recent letter. The company is involved in near field communications and is seen as a prime play on mobile payments. Third Point also saw solid performance from its position in Massey Energy as the company received a takeover offer from Alpha Natural Resources (ANR).

Positions that negatively affected Third Point's portfolio last month include Gold, Brenntag AG (ETR:BNR), Mead Johnson Nutrition (NYSE:MJN), African Barrick Gold (LON: ABG), and Accuride (NYSE:ACW).

To learn to invest like this hedge fund manager, check out Dan Loeb's recommended reading list.

Original article