Billionaire investor Dan Loeb's firm made almost $400 million betting on a post-election stock surge, report says
- A bullish bet on stocks just before the presidential election helped Daniel Loeb’s Third Point rake in nearly $400 million in profits, according to a report from the Financial Times.
- Loeb positioned Third Point’s fund to gain from any upside move in the markets, which quickly materialized after the November 3 election, as it removed a bout of uncertainty from the markets.
- Third Point, which has $13.5 billion in assets, experienced a 4.3% performance surge between November 1 and November 4, according to FT.
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One hedge fund that raked in big profits during a historic post-election rally in stocks was Daniel Loeb’s Third Point, according to the Financial Times.
Citing regulatory filings and an investor letter from the $13.5 billion hedge fund, the FT estimates that Third Point gained almost $400 million via a bullish positioning in stocks prior to the election, even as other investors were bracing for potential chaos.
Instead, an historic post-election rally for the S&P 500 and the Nasdaq 100 materialized after polls closed on November 3. The S&P 500 soared 7% last week alone.
Third Point’s gains were likely juiced further on Monday after Pfizer and BioNtech announced positive data results from its COVID-19 vaccine candidate, which sent stocks flying even higher.
Loeb told clients of Third Point weeks ago that he maintained his exposure to stocks even as election day loomed, according to a letter seen by the FT. Loeb further expanded in a video call with investors that he “was not overly worried about the effect of the election on markets,” the FT reported.
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According to the FT, many hedge fund managers had strayed away from making bets on the outcome of the November 3 election following the 2016 election of Donald Trump, which led to a surge in stocks despite consensus that a Trump win would be bad for markets.
Between November 1 and November 4, Third Point gained 4.3% as investors cheered the election of Joe Biden with a restrained agenda due to likely Republican control of the Senate.
It’s unknown how Third Point has performed since November 4, but some of its largest holdings like Prudential and Walt Disney have performed well amid news of a successful COVID-19 vaccine from Pfizer, the FT observed. More insight into those positions during the third-quarter will likely be revealed soon, as managers begin too file 13-F reports.
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