(Adds more comments from letter)
By Sam Forgione
NEW YORK, July 18 Daniel Loeb, head of hedge
fund firm Third Point LLC, said in his quarterly investor letter
dated Friday that he expects market volatility to continue and
that he is optimistic on Argentina.
Loeb, an activist investor, said Argentina is likely to
reach an agreement with its holdout creditors by yearend and
that his $14 billion firm has taken a stake in Argentine oil
company YPF SA, in addition to stakes in Mexican REIT
Fibra Uno and in Dutch life sciences company Royal
Loeb said an agreement between Argentina and its holdout
creditors would "undoubtedly benefit the Argentinian economy".
"We hope to uncover additional investment opportunities in
Argentina as it emerges from its long malaise," he said.
Argentina defaulted on roughly $100 billion in sovereign
debt in 2002. Most of its creditors subsequently reached a deal
for reduced payments, but holdout creditors sued and won a
court-ordered judgment of $1.33 billion plus accrued interest.
Loeb cited Japan as his firm's "biggest source of losses"
this year but said that he still sees "compelling" opportunities
in the country.
"We think recent macro headwinds will become tailwinds again
towards yearend but remain vigilant about inaction. A failure of
Abenomics would likely mean that it is time to move on," he said
in reference to Japanese Prime Minister Shinzo Abe's stimulus
On his firm's stake in Fibra Uno, Loeb said macroeconomic
conditions in Mexico were "very attractive" following government
reforms and that stronger economic growth would drive up rent
levels for Mexican retail, office, and warehouse properties.
Loeb said near-term trends were positive for both Royal
DSM's nutrition and materials businesses.
He said broadly that having "dry powder on hand," which
typically refers to cash, would be "increasingly useful" toward
Loeb's main Third Point Offshore Fund returned 6 percent
during the first six months of 2014, according to the letter.
That performance beat many rival managers but trailed his own
performance last year. The fund rose 2.6 percent in the second
quarter, the letter said.
(Reporting by Sam Forgione; Editing by Meredith Mazzilli; and