Loeb Credit Bet Returns 15% in Quarter on Junk Energy Holdings

  • Hedge fund manager also benefits from bet on Argentina debt
  • Loeb says election polling shows U.S. in reasonable shape

Hedge fund manager Dan Loeb’s corporate credit portfolio returned 15 percent in the second quarter, helped by a bet on high-yield bonds.

“Performance was largely driven by positive returns from performing credit investments in the energy sector,” 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. “We maintain minimal distressed credit exposure at present.”

Loeb, 54, started amassing more than $1 billion in energy credit in February, he said previously in a second-quarter letter to his hedge fund’s clients, adding that he felt there was too much pessimism in the market. His investing returns helped the reinsurer generate net income of $53.4 million in the period ended June 30, more than three times as much as a year earlier and the best quarterly result for the company since 2013.

Sovereign credit was another bright spot, with Argentinian government bonds returning about 12 percent for the quarter and 20 percent for the year. The total investment portfolio climbed 4 percent in the three months through the end of June.

‘Populist Backlash’

Loeb also addressed a question about politics on the conference call, saying that the decision by U.K. voters to leave the European Union, a move that roiled global markets, shouldn’t be treated as as sign that “populist backlash” will prevail in the U.S. presidential race. Polls this week show Democrat Hillary Clinton, the former secretary of state, ahead of Donald Trump, the Republican real estate mogul.

“We have some very unusual personalities involved in this election. I think they’re giving people some concern,” Loeb said. “I’m not going to predict the outcome, but we’re obviously watching the polling very closely. And I think that the election is important, but I think the polling would suggest that we would be in reasonable shape in this election.”

Third Point Re climbed 0.4 percent to $12.67 at 9:47 a.m. in New York.

— With assistance by Katherine Chiglinsky, and Agnel Philip

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