Third Point hedge fund experiences increasing redemptions in challenging year – WSJ

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Hedge fund manager Dan Loeb, who oversees $11.7 billion through his firm Third Point, has been facing redemption requests from investors due to losses. This month alone, Third Point experienced redemptions totaling $850 million, equivalent to over 7% of the firm’s assets. Investors familiar with the matter have reported that Third Point’s funds have slipped by approximately 1.6% this year through August, with even deeper losses of 21.8% or more in 2022. In contrast, the S&P 500 index delivered a total return of 18.7%, while the average hedge fund gained 4.7% in the first eight months of this year.

Loeb attributed his losses to his expectation of higher interest rates slowing down the US economy and his underweight position in technology stocks. However, tech shares ended up surging due to increased demand for stocks with exposure to artificial intelligence growth, such as Nvidia. Additionally, Loeb admitted to mistiming the market by increasing holdings of tech and riskier stocks as they were falling in recent weeks.

Loeb has experienced both highs and lows in the past. Third Point’s assets dropped from $7 billion to $1.4 billion during the 2008 and 2009 financial crisis and recession. However, the firm’s funds later rebounded, reaching $15 billion after ten years.

Overall, investor redemptions due to losses and a misjudgment of market trends have led to significant challenges for Dan Loeb and his hedge fund firm Third Point.

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