In his latest Q3 2023 Third Point Letter, Dan Loeb discussed how he’s finding many opportunities in improving credits with ‘bulletproof’ securities, boasting yields of 10%-13%, supported by seniority, security, or both. Here’s an excerpt from the letter:
Third Point’s corporate credit portfolio has contributed 1.3% to fund returns on a net basis year to date, and outperformed the JPM Domestic High Yield Index by more than 450bps during that time period.
In Q3, we continued to actively trade the portfolio and several eventdriven situations either came to fruition or reached their price targets. Every significant new position we initiated was in a security with an upcoming hard catalyst.
We are finding many opportunities in improving credits with ‘bulletproof’ securities (by virtue of seniority, security, or both) yielding 10%-13%.
Throughout the year we have maintained our focus on relatively defensive industries such as healthcare and telecommunications.
We also have concentrated on credits that face challenges in their capital structures or businesses that we believe are temporary and relatively easy to overcome.
We expect these situations to generate total returns in the mid-to-upper teens with moderate credit risk. Given this environment, we expect to continue to increase corporate credit exposure in the coming quarters.
You can find the entire letter here:
Dan Loeb Third Point Letter Q2 2023
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