Loeb Says Itchy-Trigger-Finger Investors Give Up on Merger Bets

  • `You really need to look at one to two years,' Loeb says
  • Hedge fund manager affirms bets on Dow Chemical, Allergan

Hedge fund manager Dan Loeb said investors are too quick to abandon stocks of companies entering transformative mergers and that he plans to capitalize by taking a longer view.

“You really need to look at one to two years,” Loeb said Friday in a conference call discussing results at Third Point Reinsurance Ltd., the Bermuda-based company that counts on him to oversee investments. “And we’re in a market where people have very itchy trigger fingers and they’re selling, or they’re not taking positions until these sorts of deals are completed.”

Loeb is among hedge fund managers burned by surprises on deal-related bets, suffering losses on his Allergan Plc investment when Pfizer Inc. terminated its $160 billion merger with the drugmaker after the U.S. government proposed regulations to crack down on corporate tax inversions. He reiterated his support on the call for companies including Dow Chemical Co., which has agreed to combine with DuPont Co. He also has bet on Anheuser-Busch InBev NV, the brewer that struck a deal to buy SABMiller Plc.

Hedge funds are seeking to recover from what Loeb has called a “catastrophic” period. He said on Friday’s call that he was referring to the industry, rather than his own fund, which lost about 2 percent in the first quarter of this year.

‘Minus Column’

“We did a reasonable job protecting capital,” Loeb said. “I’m never delighted to be in the minus column, but given what happened to a number of other funds this quarter, it puts us in good position to deploy capital into the kind of environment that we’re in.”

Allergan stock has slumped about 34 percent this year. Loeb said he remains confident in the company and Chief Executive Officer Brent Saunders, even after the Pfizer deal collapsed.

Third Point Re rose 17 cents to $11.34 at 9:37 a.m. in New York trading, narrowing its decline for the year to 15 percent. The company on Thursday posted a first-quarter loss of 49 cents a share, beating by one cent the average estimate of analysts surveyed by Bloomberg, and said it authorized the repurchase of as much as $100 million in shares.

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