Third Point

Dan Loeb’s Third Point released its quarterly letter for March. We posted some details from the letter earlier today (and have the full hedge fund letter embedded below). As of March 31st, Third Point has $11.7 billion total aum and has so far produced a nine percent return for 2013.

Two ‘new’ positions appeared in the letter, both European auto companies; Volkswagen AG, and Porsche Automobil Holding SE (ETR:PAH3) (FRA:PAH3). The truth is that Dan Loeb publicly announced that he had a long position in Volkswagen AG over a year ago. In Maneet Ahuja’s The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds, Loeb is quoted as follows:

Loeb says that Third Point also develops top-down theses about sectors, industries, and economic trends. He gives an example: “In the 1990s, we recognized that the growth of the Internet would have a huge impact, but instead of focusing just on new internet companies, we bought a bunch of old-line companies that had internet companies embedded within them and we did quite well without taking the risk attendant in purchasing shares of high-flying overpriced internet companies.

More recently, we bought U.S. and European companies that had large emerging market components, such as Swatch, Volkswagen, and Mercedes, and got emerging markets growth with domestic market valuations.”

The interview was conducted sometime in 2011 or in early 2012. Loeb has likely been building his stake since the announcement. The same rationale used for Swatch, Volkswagen and Mercedes arguably apply to Porsche Automobil Holding SE (ETR:PAH3) (FRA:PAH3), as well.  We have long suspected that Dan Loeb had significant long positions in both companies, and that has been confirmed today (the two companies have been ‘involved’ in a lawsuit involving several hedge funds).

According to regulatory filings from Bundesanzeiger (the German department of Justice), one large fund is  shorting Volkswagen AG (ETR:VOW) (FRA:VOW). BG Master Fund Plc has a short position in Volkswagen AG (ETR:VOW) (FRA:VOW) equal to 0.71% of outstanding shares. No funds have short positions in Porsche above 0.50% of the float (the minimum threshold required for reporting).

Full letter below:

2013 3 March Monthly Report TPOI Dan Loeb Third Point by