Dan Loeb is one of the hottest hedge fund managers, returning more than 40% in 2010 after fees and expenses. His 2011 performance is also on track to deliver spectacular returns. Dan Loeb’s Third Point Partners L.P. returned 3.7% in February and 8.1% during the first two months of 2011. Dan Loeb’s top 5 positions at the end of February were Gold, Delphi, Chrysler, El Paso Corp (EP), and LyondellBasell. His top winners are Gold, NXP Semiconductor, El Paso, Technicolor, Williams Companies Inc (WMB). (You can see the details of Loeb’s latest investor letter here.)
In this article, we will focus on Dan Loeb’s largest stock picks in his 13F portfolio. The performance of these stocks is in line with his reported returns. We don’t know Loeb’s short positions but most individual investors who follow hedge funds imitate their long positions. Here are Dan Loeb’s top 13F holdings and their performance since the end of December.
Company | Ticker | Return | Value (x1000) |
POTASH CORP | 8.4% | 185796 | |
LYONDELLBASELL | 17.4% | 153518 | |
ALCON INC | 1.7% | 130720 | |
MASSEY ENERGY CO | 26.3% | 107300 | |
WILLIAMS COS | 24.5% | 98880 | |
P H H CORP | -8.2% | 81025 | |
HEALTH NET INC | 15.4% | 76412 | |
C I T GROUP INC NEW | -9.7% | 73005 | |
N X P SEMICONDUCTORS | 35.2% | 65942 | |
LIBERTY MEDIA CORP NEW | -0.5% | 63080 | |
MEAD JOHNSON NUTRITION | -7.1% | 62250 | |
LENDER PROCESSING S. | 9.8% | 53136 | |
APPLE INC | 6.9% | 51610 | |
ABITIBIBOWATER INC | ABH | 13.9% | 45610 |
ASPEN TECHNOLOGY INC | 17.3% | 44450 | |
SMURFIT STONE CONTAINER | 47.8% | 38400 | |
SUNOCO INC | 11.8% | 36279 | |
DEPOMED INC | 44.5% | 33708 | |
CITIGROUP INC | -6.3% | 33110 | |
COMCAST CORP NEW | 13.1% | 25266 | |
ORITANI FINANCIAL CORP | 3.5% | 25008 | |
AIRGAS INC | 5.7% | 24984 | |
C V R ENERGY | 39.5% | 24288 | |
SPDR GOLD TRUST | 0.4% | 23999 | |
XERIUM TECHNOLOGIES INC | 46.7% | 22911 | |
N A B I BIOPHARMACEUTICALS | -0.7% | 22014 | |
RIO TINTO PLC | -3.4% | 21498 | |
ABRAXAS PETROLEUM | 8.3% | 21010 | |
MADISON SQUARE GARDEN | 5.4% | 20624 | |
VIEWPOINT FINANCIAL | 11.6% | 18725 |
Potash is Dan Loeb’s largest position. The stock returned 8.4% this year, beating the SPY by 3.9 percentage points. David Einhorn’s Greenlight, Thomas Steyer’s Farallon Capital, Jim Simons’ Renaissance, Andreas Halvorsen’s Viking Global, Richard Perry’s Perry Capital, and Mohnish Pabrai have large Potash investments.
LyondellBasell is another brilliant stock pick, returning 17.4% since the end of December. David Einhorn, Tom Steyer, and Andreas Halvorsen are other hedge fund managers who have LYB investments.
Overall, Dan Loeb’s top stock picks returned 12% since the beginning of this year, beating the index funds by 7.5 percentage points in less than 3 months. The regression tests we conducted at the end of 2010 also showed that Dan Loeb generated a 7% annual alpha after fees and expenses. Legendary investor Warren Buffett’s alpha was nearly zero during the same time period.
We believe investors can outperform the market by imitating Dan Loeb's top 30 positions. This portfolio will also have enough diversification. If investors had bought these stocks on February 15th after Loeb disclosed his holdings, they would have returned 0.6%, vs. SPY's 0.9% loss. This is an outperformance of 1.5 percentage points in less than 1.5 months.
Disclosure: I am long C.
Additional disclosure: I am long physical gold.
