Does Dan Loeb Secretly Love Short Selling?
Like a lot of hedge fund managers, Dan Loeb might be suspected of having a love-hate relationship with short selling. And who could blame him?But even though short bets have been painful for Third Point in recent months, Loeb is backing a new long-short equity firm, called Snowhook Capital Management, launched by the man who was formerly Third Point’s top short seller.When the Covid pandemic hit the markets in the early part of the year, Loeb’s Third Point portfolio was considerably shorter than it is now. But even so, Loeb has admitted he wasn’t prepared for what was to come. “We did not ascribe adequate probability to a full-blown global pandemic in our scenario analysis around Covid-19 nor to its blunt but necessary cure: a total economic shutdown in much of the world,” he told investors in his first-quarter letter. Third Point’s short book provided much-needed ballast during the storm, even as the fund sank in to the red, losing 16 percent during the first quarter. But as markets recovered, Third Point’s short positions have become among the top five monthly losers in five of the past nine months, according to the firm’s reports to investors. And in 2019, two of…
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