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The Morning Brief: Third Point Sharply Reduces Short Bets

Dan Loeb’s Third Point has turned more bullish...or at least less bearish. Heading into the final month of the year, the multistrategy manager ratcheted up the net exposure of its Third Point Offshore hedge fund’s long-short book to 55.5 percent, up from 46.7 percent the previous month. Most of the difference is due to a sharp reduction in the portfolio’s short book, from a nearly 24 percent exposure to just 7.5 percent. The long exposure, however, was trimmed, but not nearly by the same magnitude as the short book.

The upshot: The gross exposure was cut by about 24 percentage points, to around 70 percent, not exactly a resoundingly bullish stance. Broken down geographically, virtually all of this exposure is to the Americas. These moves come after Third Point Offshore — which Third Point describes as an event-driven value fund — lost 0.90 percent last month, trimming its gains for the year to 5.5 percent. During the same month the S&P 500 surged 3.7 percent.

The multistrategy fund suffered virtually all of its losses in its long-short book, which declined 1.8 percent in November. It lost money on both the long and short side. Third Point’s credit book lost 0.40 percent on the long side but gained 0.30 percent on the short side, for a slight loss. Rather, Third Point’s gains were driven by its “other” book, which surged 1 percent. However, the firm does not elaborate on which strategies comprise “other” in the snapshot monthly report it makes available to investors.


Och-Ziff Capital Management suffered another few hundred million dollars in redemptions in November. The embattled multistrategy firm reported that total assets under management grew by $100 million, to $37.1 billion. That works out to a 0.27 percent increase, or about one-quarter of 1 percent. However, during the same period, the firm’s major hedge funds fared much better than that. Its flagship OZ Master Fund, for example, surged 1.51 percent in November, lifting its gains for the year to 3.16 percent. Meanwhile its OZ Asia Master Fund gained 1.30 percent last month, trimming its loss for the year to 2.66 percent. The OZ Europe Master Fund was roughly flat for the month and is up 1.84 percent for the year.


Bill Ackman’s Pershing Square Holdings, run by his firm Pershing Square Capital Management, surged 11.5 percent in November, its best month in more than two years. This cut the activist fund’s loss for the year to 13.5 percent. So unless it fares even better in December, it is all but assured to post its second-straight loss. Last month Pershing Square benefitted from its big negative bet on Herbalife, the controversial multi-level marketer of nutrition and health-related products. The stock was down 19.2 percent. On the long side, mortgage company Fannie Mae surged 164 percent. Its big stake in Valeant Pharmaceuticals International was down more than 11 percent.


Assets at Leon Cooperman’s Omega Advisors edged up from $4.6 billion to $4.7 billion over the past month. At the end of October, Omega Overseas Advisors was up a little less than 1 percent. The firm is currently battling Securities and Exchange Commission charges that it engaged in illegal insider trading and other securities violations.


Shares of hedge fund favorite Pandora surged more than 16 percent on Friday, to close at $13.34, on reports the streaming music company is open to being acquired. Back in July the Wall Street Journal reported that Pandora rejected a takeover offer from Liberty Media. At the end of the third quarter, Eminence Capital and Corvex Management were among the five largest investors in Pandora.

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