Loeb Has Good Reason to See a Possible Hedge Fund Washout

The Third Point founder says volatility is bringing opportunity. But for funds that trailed in the boom times, tough times lie ahead.

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Third Point founder Daniel Loeb created quite a stir Wednesday when he asserted, “we are in the first innings of a washout in hedge funds and certain strategies.”

In the New York manager’s first-quarter letter sent to clients and widely circulated, Loeb points out that “most investors have been caught offsides at some or multiple points over the past eight months,” alluding to August, when the bull market suffered a major — and unexpected — swoon.

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