In his first quarter letter to investors, Dan Loeb said his Third Point LLC flagship Offshore Fund fell 11.5% during the quarter and the fund adopted a significantly more defensive posture. However, in April, the fund performed strongly versus the market, falling just 1% versus drops of 8% and 13% for the S&P 500 and Nasdaq, respectively. Loeb is adding to Oil and Gas stocks and initiating short positions.
Loeb said the firm's net exposure is lower and buying power higher than at any time during the last ten years. Their beta-adjusted net equity exposure is down to 41% at the end of Q1 from 75% at the start of the year.
In addition to their winning Shell PLC (NYSE:SHEL) position, Loeb said the fund started positions in other oil and natural gas companies in Q1. In addition, the fund added to materials companies that they believe will benefit from inflation, supply shortages, and the adoption of EVs and other renewable sources of energy.
Loeb said U.S. oil and gas companies are particularly interesting, given the irresponsible energy policies of the world's most developed nations, including the U.S.
The hedge fund manager said they continue to add to their position in Shell, initiated a long position in Glencore (OTC:GLNCY) in the first quarter and continue to see "immense value and potential" in Pacific Gas & Electric (PCG).
On tech stocks, Loeb said, even after the massive declines, it is hard to call a bottom. He notes that many of these companies relied on stock-based compensation and controversial accounting and reporting techniques. Companies that use this type of compensation may have difficulties retaining employees, leading to increased dilution for future stock grants or increased cash wages that could weigh on margins.