Dan Loeb's Third Point Offshore Fund finished May -0.4% and year-to-date is up 9.7%. Managing around $4 billion, the hedge fund is closed to new investors and has seen 18.8% annualized returns.
Equity Exposure
The month of May was a volatile one for the markets in general and hedge funds were no exception. Third Point ratcheted down exposure to equities as they were 42.6% net long at the end of the month (60.3% long and -17.7% short). The month prior, the hedge fund was 46.8% net long equities, marking a 4.2% decrease in exposure from April to May.
Third Point's largest exposure this time around continued to be the consumer sector at 9.5% net long and basic materials at 8.2% net long.
Credit Exposure
In credit, Third Point was 34.4% long, -7.7% short, leaving them 26.7% net long. This is down from 29.4% net long the month prior. Their largest exposure in this segment continues to be asset backed securities.
Top Positions
Third Point's top holdings at the end of May were:
1. Gold
2. Delphi
3. El Paso (EP)
4. Technicolor (Multiple Securities owned)
5. CVR Energy (CVI)
Earlier today we posted up that David Tepper's Appaloosa Management recently bought more CVR Energy. Also, we highlighted how Delphi will be going public and there are numerous hedge funds involved in that name as well.
In the month of May, Third Point's top winners included: Delphi, El Paso, Short A, Short B, and Aveta.
The hedge fund's top losing positions for the month included: NXP Semiconductor (NXPI), NewPage, Williams Companies (WMB), Big Lots (BIG), and gold.
For rationale behind some of their investments, check out Third Point's investor letter.
Tuesday, June 7, 2011
Dan Loeb's Third Point Reduces Equity Exposure
Tepper's Appaloosa Boosts CVR Energy (CVI) Position
David Tepper's hedge fund Appaloosa Management recently disclosed an updated position in CVR Energy (CVI). Due to a 13G filed with the SEC, Appaloosa now shows a 8.26% ownership stake in CVI with 7,141,434 shares. This latest disclosure reflects trading as of May 23rd, 2011.
This marks an increase in their position size to the tune of almost 360% as they owned only 1,556,374 shares at the end of the first quarter. Interestingly enough, a selling stockholder affiliated with Kelso & Company LP shed 7,988,179 shares of CVI to Goldman Sachs on May 23rd.
Spin-Out of Fertilizer Business
The company had a secondary offering in February and numerous hedge funds were involved. Dan Loeb's Third Point, in particular, bought CVI under the spin-out thesis.
CVR Energy filed an IPO for its fertilizer business and will pursue an MLP structure for this offering. Hedge funds invested in the stock believe this new offering will garner a high valuation due to high demand for yield in the current low interest rate environment. You can see the full rationale for buying CVR Energy here.
Per Google Finance, CVR Energy is "an independent petroleum refiner and marketer of transportation fuels. In addition, the Company owns all of the interests (other than the managing general partner interest and associated incentive distribution rights (the IDRs)) in CVR Partners, LP (the Partnership), a limited partnership which produces nitrogen fertilizers in the form of ammonia, and a solution of urea and ammonium nitrate in water used as a fertilizer (UAN)."
To see the rest of David Tepper's investments, head to the brand new issue of our Hedge Fund Wisdom newsletter.
Steven Cohen's SAC Capital Builds OCZ Technology (OCZ) Stake
In a 13G filed with the SEC, Steven Cohen's prominent hedge fund SAC Capital disclosed an updated position in OCZ Technology Group, Inc (OCZ). Due to trading on May 26th, 2011, SAC has revealed a 5.1% ownership position in OCZ with 2,623,346 shares.
This is a massive increase in the hedge fund's position size as they only owned a measly 9,784 shares at the end of the first quarter.
Stock Down 30% Past 1.5 Months
OCZ traded down over 8% yesterday. Since the middle of April, shares are down over 30%. This is at least partially attributable to a negative research report published by Copperfield Research on April 20th, 2011. Also worth noting: over 24% of the float is short.
Our pal & trader @firstadopter on Twitter has been all over this saga. He rebutted the Copperfield report and then laid out why OCZ could be worth $28 per share based on rival Fusio-io's impending IPO. OCZ provides solid state drives (SSDs) and memory modules for computers and other systems.
Shares of OCZ have seen heightened volatility as of late, so it will be interesting to see how it trades after receiving a vote of confidence from SAC Capital.
