Dan Loeb Still Favors Gold
In the most recent report Loeb reveals that his largest position is still gold. It is unclear whether Loeb owns the gold via futures, stored bullion or the gold ETF GLD (GLD).
Loeb's other large positions include:
2. Delphi Corp (multiple securities) (DFG)
3. CIT Group (multiple securities) (NYSE:CIT)
4. Technicolor (TCH)
5. El Paso (EP)
From a previous letter in first quarter 2009, Loeb mentioned that he owned gold as insurance on a “doomsday” scenario and also to protect his portfolio against “fat tail risk” trades. However, Loeb also mentioned that he preferred to focus on his core areas of expertise: event-driven and special situations, short-selling, high yield and distressed debt. In another of Third Point's letters, Loeb mentioned how the firm had executed several "asymmetrical trades using derivatives, options and debt securities to hedge against extraordinary global events." Given that gold is now Loeb's top holding it would stand to reason that he expects "extraordinary events" to be entirely possible in the fourth quarter of 2011.
Another key point from Loeb's 2011 report is that his gold position did not insulate his portfolio from losses last quarter. His funds dropped between 2.7% and 4.5%, yet fortunately his funds are still outperforming the S&P. Loeb's Third Point Ultra fund is up 3.5% YTD while the S&P is down 1.8%.
Given that gold was up 20% last quarter one can speculate that Loeb's gold holdings are no greater than 10% of his total portfolio. Loeb does not reveal the size of his portfolio holdings.