Dan Loeb’s Third Point is dealing with big investor outflows in 2023, the Wall Street Journal reported. Investors have pulled funds after Loeb missed out on the huge tech rally earlier this year. The WSJ report said Loeb is now betting on an eventual credit crunch amid rising interest rates. Loading Something is loading.
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Hedge fund Third Point, led by billionaire investor Dan Loeb, has struggled this year as it missed out on the monster rally in tech shares that powered the market higher through much of 2023.
According to a Friday report from The Wall Street Journal, Third Point funds have dropped by about 1.6% through August. That follows a 21.8% loss in 2022 — which exceeded the S&P 500’s 18.1% decline — and investors don’t seem to be sticking around for the rebound after Loeb missed out on the sharp tech rally earlier this year.
The report from the Journal said investors have requested withdrawals at the end of September that amount to $850 million, more than 7% of the firm’s assets. Prior to this month, investors had already pulled roughly $1 billion from the hedge fund.
Over the last 28 years, Third Point has averaged annualized returns of 16% after fees, the Journal said.
Large investors that have taken money out of Loeb’s firm include Sacramento County Employee’s Retirement System, which requested to pull $60 million from Third Point earlier in 2023 due to the fund’s performance, the group’s CEO, Steve Davis, said, per the Journal.
“I’m not thrilled with the results, but each time we’ve had 20% drawdowns, we’ve more than made up for them,” Loeb told the Journal.
Meanwhile, Third Point had made a significant investment in Sam Bankman-Fried’s crypto exchange, FTX, which turned out to be worthless after the crypto exchange’s stunning collapse in November 2022.
Loeb is now looking ahead to a potential credit crunch. Debt troubles are looming, in his view, as corporate debt maturities pile up and will have to be refinanced in much less favorable conditions and at higher rates.
Loeb predicted an “avalanche” of corporate refinancings on the horizon. “We want to be good and ready to deploy capital when the next cycle comes,” he told the Journal.