Third Point's Loeb bets big, and wins, on Greek debt

Wed Oct 3, 2012 12:39pm EDT

* Greek government bonds in top 5 positions for Loeb's fund

* Fund rose 3.4 pct in September, up 10.9 pct YTD

By Katya Wachtel

NEW YORK, Oct 3 (Reuters) - Hedge fund manager Daniel Loeb built a major position in distressed Greek government bonds in September, according to a monthly report he sent to his investors.

Loeb's nearly $5 billion Third Point Offshore Fund gained 3.4 percent last month, helped by its position in Greek debt, said the Sept. 30 dated note which was reviewed by Reuters.

The holding of Greek government bonds, which ranks in size with the firm's stakes in Apple Inc and Murphy Oil Corp , appears to be a long position given the robust rebound in that country's debt over the past month.

Greek debt has risen in value as concern about the collapse of the euro zone has eased a bit following steps by the European Central Bank to prop-up some nations' ailing economies.

The Third Point letter did not disclose any of the maturity dates of the Greek bonds it had purchased. But the total return on 10-year Greek government bonds in September was 29 percent. In the third quarter, those bonds gained 53 percent.

If the manager goes long a bond or a stock, he believes the value of those securities will rise.

Loeb has already had success this year with bets on the sovereign debt of another stressed European nation: Portugal. Investments in that country's government bonds were one of Third Point's biggest winners in the second quarter, the New York-based firm told clients in a quarterly note it sent at the end of July.

In that letter the $9.3 billion hedge fund had told investors "we anticipate Europe's dysfunctional capital markets to continue generating a steady stream of similar eventdriven, attractive ideas for us to incorporate into our portfolio."

The Third Point Offshore Fund is now up almost 11 percent for the year through the end of last month, while most hedge funds rose just over 3 percent through Sept. 26, according to Bank of America Merrill Lynch. The broader stock market rose 2.5 percent last month, and has risen 16.4 percent for the year.

Loeb's other winners in September included Third Point's largest holding, technology company Yahoo, as well as bets on gold, Ally Financial and an undisclosed short bet.

Losing bets for Third Point during September were American International Group, Enphase Energy Inc, two short positions in technology, media or telecommunications companies and an asset-backed-security short position, according to the note.

Loeb, who is one of the most closely watched hedge fund managers in the $2 trillion industry, is known as much for his strong returns as his pointed letters to corporate boards over the years.

The Third Point Offshore Fund has provided investors with annualized returns of over 17 percent since the fund's inception in 1996.

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