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Investor Dan Loeb's pragmatic, opportunistic approach pays off
May 9, 2013 / 10:26 PM / 4 years ago

Investor Dan Loeb's pragmatic, opportunistic approach pays off

LAS VEGAS, May 9 (Reuters) - Billionaire investor Daniel Loeb will go anywhere for a good trade, he told an industry conference, discussing the strategies that have turned him into an industry stand-out in 2013, according to people who heard him speak.

Loeb discussed everything from his bet on Japan, to Greek and Argentinian debt and nutritional supplements company Herbalife, said these people.

Reporters were excluded but investment managers and investors flocked to hear Loeb whose $13 billion Third Point fund has enjoyed double-digit returns in the first four months of the year. The rest of the hedge fund industry limped along at an average 4.6 percent over the same period, while the broader stock market rose 12.7 percent.

While many other funds are wedded to one type of investment or style, Loeb said he is pragmatic and opportunistic, searching the globe for his next best idea.

Loeb made money, for example, by betting against the Japanese yen as the currency recently tumbled in response to an expansionary monetary policy.

Loeb is one of a handful of prominent hedge fund managers speaking at this year’s SkyBridge Alternatives Conference which attracted some 1,800 managers, investors and service providers to Las Vegas at a time the industry is delivering only middling returns.

Some of those who packed the Bellagio’s Grand Ballroom to hear Loeb speak later shared details of his comments.

During his one-on-one with SkyBridge founder Anthony Scaramucci, Loeb detailed how he had hashed out the contours of the Greek trade on a 3-hour bike ride with an analyst, said people who watched the interview.

“The biggest risk” on the trade “was not being big enough,” Loeb said, according to two people.

The firm’s investment in Greek government bonds was one of its biggest winners in 2012, but that debt was one of the fund’s top losing positions in the first quarter of 2013, according to an investor letter reviewed by Reuters.

One of the fund’s biggest winners during the first quarter was Herbalife. Loeb told the audience in Las Vegas how he was on vacation with his family in Mexico when the stock had “tanked” after another investor, whose name he could not remember just now, said the stock was “dead.”

The audience roared with laughter at his veiled reference to hedge fund manager William Ackman who has famously declared the stock will move to zero, attendees said.

Loeb said he thought that was an over-reaction and when Third Point did its own research it decided to invest, deeming the fast growing company had good cash flow.

Loeb also said there had been a “Jersey Housewife-ification of the hedge fund industry,” referencing a feisty TV reality show. Competing views of Herbalife have played out aggressively in public, including a clash on CNBC television between Ackman and investor Carl Icahn, who has taken a favorable view of Herbalife.

So far, both Loeb and Ackman’s Pershing Square Capital Management have made money on Herbalife because Ackman bought it a higher price. Loeb has now exited the position, cashing in on his winnings. “It was about the investment and not the other stuff which was distracting,” Loeb said, according to one person who heard him speak.

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