Once upon a time Dan Loeb was a Democrat. Then Barack Obama was mean to him, leading to one of his first rather unfortunate comparisons, and since then he’s been a pretty committed Republican, unless you happen to be the kind of Democrat who likes charter schools. So you might expect him to be a bit disappointed by last week’s result. And he might well be. But he’s probably not feeling too bad about it.
Daniel Loeb’s Third Point gained nearly $400m in a bullish bet on the outcome of the US election…. Mr Loeb had explained how, as a result of the firm’s research and use of data providers, he was not overly worried about the effect of the election on markets…. Mr Loeb has since made around a further $200m, taking gains this month to a total of around $600m, or 7 per cent. His fund was helped by Monday’s rally that lifted some of his biggest holdings such as Prudential and Walt Disney. Third Point did not respond to a request for comment.
While sangfroid has paid off big for Loeb so far, it’s not really Bill Ackman’s style—not that it’s hurt him any. He’s worried, you see. Worried about the future of American democracy, for one, and also about that rally that’s padding his nemesis’ bottom line so generously. And so, while he really hopes it doesn’t make him rich like it did last time, Billy’s positioning himself for a lucrative downturn.
At the start of this week he put on a new trade hedging his equity exposure with insurance against corporate defaults, he said.
“I hope we lose money on this next hedge,” Mr Ackman said. “We’re in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine.”
He said the new hedge is close to 30 per cent the size of the bet he placed in late February, when he bought a set of huge insurance policies linked to $71bn of corporate debt.
Daniel Loeb’s Third Point gains nearly $400m on US election call [FT]
Ackman places new bet against corporate credit [FT]