Third Point turned much more bearish at the end of February.
The hedge fund headed by Dan Loeb cut its net long exposure from 71.2 percent to less than 53 percent, mostly by boosting its short exposure more than 12 percentage points, according to its February monthly report.
The pullback in its long positioning is a little surprising given that in its fourth-quarter letter, made public in early February, Third Point told clients it was bullish on stocks for 2025. “We expect the environment for investing in equities to continue to be favorable, with the caveat that there will likely be periodic dislocations caused by the unconventional approach of this administration in conveying and enacting policy that affects markets and the economy,” it stated. “We remain optimistic about the sectors that will benefit from certain of these policies, as well as an increase in M&A and other corporate activity which feeds our event-driven framework.”
Third Point’s exposure reduction came as the hedge fund, which emphasizes long-short equities, credit, and privates, reported a 2.3 percent loss last month compared with a 1.9 percent decline for the S&P 500, including dividends reinvested. As a result, Third Point is now up less than 1 percent for the year.
Third Point’s fundamental and event-driven book accounted for virtually all of the losses last month, especially on the long side.
Drilling down, three high-profile tech or related stocks were among the big detractors: e-commerce and cloud giant Amazon, chip maker Taiwan Semiconductor Manufacturing, and electric-vehicle maker Tesla. Life sciences and diagnostics company Danaher and an unidentified short position rounded out the five largest losers for the month. TSMC, Amazon, and the short were also among the five worst performers over the first two months of the year.
Facebook parent Meta Platforms, investment bank UBS, and Intercontinental Exchange — which owns futures, equity, and options exchanges, including the New York Stock Exchange — were the three biggest winners over the first two months of the year. The credit book and privates slightly offset the losses.
Heading into March, four of Third Point’s five largest longs are familiar top holdings in the hedge fund’s portfolio: California utility Pacific Gas & Electric, TSMC, Amazon, and UBS.
One new stock was added in January: industrial technology conglomerate Fortive. Third Point initiated its position in the fourth quarter and the stock was a midsize position at year-end, ranking as the firm’s 21st- largest U.S.-listed long position. The hedge fund apparently added significantly to its position in January, pushing it into the top five.
