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Alternative Market Briefing

It pays to invest in Greek bonds like Third Point

Monday, January 07, 2013

Benedicte Gravrand, Opalesque Geneva: - Daniel Loeb's $10bn hedge fund firm Third Point saw its flagship fund return 21% YTD compared to 13% for the S&P 500, according to media reports (the more leveraged Ultra Fund returned 34%). This is after gaining 3.6% in December, reportedly thanks to contrarian investments in Greek government bonds. Third Point's current top holdings are Yahoo, American International Group (AIG) and gold, along with an activist position in Murphy Oil.

"We have invested profitably in European credit situations in 2012, generating a 35% return on average capital invested over the past six months while nearly tripling our gross investment in the area. Our selective approach to investing in distressed credit during this chaotic time in the region was enabled by two key facets of our investment process, which we have found to be replicable in various stressed environments," Loeb wrote in his Q3-2012 investor letter in October.

The first key facet is that money can be often made in credit situations where assumptions are not rosy "but simply less draconian than those of a market in panic," he explained. Th......................

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