market folly

Due to activity on May 25th, 2010, Dan Loeb's hedge fund firm Third Point has filed a 13G with the SEC regarding shares of Xerium Technologies (XRM). Per the filing, they show an 8.6% ownership stake in the company with 1,294,507 shares. This is a newly disclosed position for Loeb's firm as they previously did not show an equity stake when we covered Third Point's portfolio. However, it is very likely that Third Point owned a position in Xerium's debt as the company just exited bankruptcy (a security that they aren't required to disclose).

Per the restructuring, Xerium exchanged $620 million of existing debt for $10 million in cash, $410 million in new term loans, and 82.6% of the new common stock of Xerium. So, this is a new equity stake for Loeb's firm but they've likely received it due to the recent debt conversion. Loeb has also been active in other companies as of late since we just disclosed his new Roomstore stake. Third Point was -5.6% for May but is still up 12.6% for the year according to our May hedge fund performances update. To get an idea as to how Third Point may have generated such performance, we previously detailed their latest exposure levels as well.

Taken from Google Finance, Xerium Technologies (XRM) is "is a global manufacturer and supplier of two types of consumable products used primarily in the production of paper: clothing and roll covers. Xerium’s clothing segment products include various types of industrial textiles used on paper-making machines and other industrial applications."

To learn how to become a successful investor like the hedge fund manager himself, head to Dan Loeb's recommended reading list.