Greek Debt Buoys Third Point In Sept.

Oct 8 2012 | 11:49am ET

The Greek debt crisis may once have looked like an impending global catastrophe—but it isn't anymore, according to Dan Loeb, and his investors are profiting from that fact.

Loeb's Third Point has built up its holdings of Greek debt to such an extent that they are now among the hedge fund's top five holdings, Reuters reports. Third Point also more broadly increased its holdings of European credit in July and August, and it's paid off: Third Point's $5 billion flagship Offshore Fund rose 3.4% in September and is up 10.9% this year.

European Central Bank chief Mario Draghi's "campaign to save the euro began in late July, and reinforced our belief that the probability of a Greek default was probably overstated by the market," Loeb wrote in his quarterly letter to investors. He said the fund had bought up some Greek bonds for an average of 17 cents on the dollar. The bonds are now trading higher.

Loeb quoted the later rapper Tupac Shakur's "Keep Ya Heads Up" in the letter, noting that Shakur said he was "tryin' to make a dolla outta 15 cents."

"While we may not have achieved the over six-fold return that Mr. Shakur (Tupac) earned plying his trade, we believe the potential risk-adjusted return on [Greek bonds] is more favorable, particularly when adjusted for the risk of potential regulatory intervention he faced," Loeb wrote.

Loeb added that, in addition to Greek debt, Third Point profited from its bets on Ally Financial, gold and Yahoo!, while losing on American International Group and Enphase Energy.


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.