Dan Loeb — the billionaire founder of New York-based hedge fund Third Point — is facing clients who are looking to withdraw their cash as his funds have fallen into a major slump, according to The Wall Street Journal.
Third Point, which is listed on the London Stock Exchange and has some $11.7 billion under management, saw assets fall about 1.6% so far this year through August — a rough blow after experiencing at least a 21.8% plunge in 2022, The Journal reported.
Investors have recently requested withdrawals to the tune of $850 million — more than 7% of the firm’s assets, people close to the matter told the outlet.
Of those wanting their investment back was Sacramento County Employees’ Retirement System, which first invested in Third Point in 2012, but has recently requested roughly $60 million back.
“I’m not thrilled with the results, but each time we’ve had 20% drawdowns, we’ve more than made up for them,” Loeb said in an interview with The Journal.
Luckily for Third Point, over $1 billion of its total capital is held under terms that prevent it from being easily withdrawn, according to the news site.
However, Loeb’s risky short-selling endeavors didn’t pay off like they once did.
“Fundamental analysis is increasingly taking a back seat to monitoring daily option expiries and Reddit message boards, as evidenced by the numerous short squeezes and manipulations of heavily shorted stocks such as AMC and GameStop in 2021 and others this year,” Loeb penned in Third Point’s second-quarter letter for the three-month period ended June 30.
Meme stocks burned short sellers like Loeb who, as of December, owned a 6% in Bath & Body Works — a $525 million bet that equates to 13.75 million shares.
In February, the firm launched a proxy fight against the soap and candle giant over lagging financial performance and overpaid executives, according to The Journal.
Third Point gained a board seat in a settlement, though retailer’s stock is still down about 20% for 2023.
Loeb also boosted his firm’s position in Alibaba — the China-based e-commerce giant that Loeb described as a “top five loser” in his letter.
And though the 61-year-old hedge fund tycoon also recently upped his stake in tech darlings like Amazon, Microsoft and Nvidia, he admitted that “the positions were undersized.”
Put another way, Loeb’s firm didn’t own enough tech shares to fully profit off the AI boom the stock market experienced over the summer, such as when Nvidia’s stock surged by as much as 10% in August after the chip maker reported revenues that crushed Wall Street expectations.
Also last month, Amazon shares jumped over 7% thanks to its $134.4 billion revenue for the latest quarter, though the Jeff Bezos-owned Big Tech firm has faltered lately.
In the past month, shares of Amazon have fallen nearly 7%, to $125.98, while the seemingly-untouchable Nvidia has experience an over-11% slip, to $430.89.
Microsoft has also slipped 4.5% this month, to $313.64, spelling more bad news for Loeb, who reportedly added over 470,000 shares of the tech giant to Third Point’s portfolio in the latest quarter, according to Seeking Alpha.
The transaction increased Third Point’s position in the company by some 45%, according to the outlet.
Loeb, who’s worth an estimated $3.3 billion, also sought to cash in on Taiwan Semiconductor, opening a 2,450,000 share stake in the semiconductor manufacturer, making it Third Point’s seventh-largest holding, according to Seeking Alpha.
The financial services outlet predicted that Loeb paid as much as $107 per share for TSMC at the time of its purchase last month. As of Friday, the Taiwanese company is trading at $86.41 per share.
However, TSMC has had a somewhat volatile year, gaining over 30% in the first quarter before dipping as much as 20% and then gaining another 30% — a rollercoaster that saw Warren Buffett’s Berkshire Hathaway sell its stake in the company at the end of the first quarter.
“I feel better about the capital that we’ve got deployed in Japan than in Taiwan,” Buffett said at an annual shareholder meeting earlier this year.
Representatives from Third Point did not immediately respond to The Post’s request for comment.
Third Point’s recent financial woes are just the latest in a series of missteps over the years.
After the 2008 financial crisis, Third Point’s assets dropped to $1.4 billion from $7 billion, according to The Journal.
By 2019, assets under management were up to $15 billion, though the fund currently manages just under $12 billion.
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