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Something must be in the water over at 399 Park Avenue, where Daniel Loeb’s hedge fund Third Point is headquartered. His Third Point Ultra fund has already gained 12.42 percent this year through the 13th of March, according to data from HSBC’s Private Bank.

The portfolio added 3.3 percent alone between March 1 and March 13. By comparison, hedge funds have returned about 4 percent year-to-date, according to HSBC.

The roughly $1.7 billion Ultra portfolio is a levered version of the firm’s flagship Offshore fund, which manages about $5.7 billion and has gained 8.5 percent over the same period.

It will be more useful to check in again at the end of the month to see where Ultra’s returns are but we thought the gains were worth pointing out because the fund is among the Top 10 performers in HSBC’s HedgeWeekly report again after finishing in the Top 10 last year.

Ultra rose 34.5 percent in 2012, far outpacing most hedge funds, which on average gained about 6 percent. Loeb’s success in 2012 was perhaps more impressive given the fact most of the funds that really stormed home last year were credit-focused funds, which made a ton of money as bonds of every kind rose in value through the year.

Third Point got off to a strong start this year after riding the Japan macro Abe-trade<http://uk.reuters.com/article/2012/12/28/markets-japan-stocks-idUKL4N0A21WM20121228>, which paid off for a number of hedge funds, notably George Soros<http://online.wsj.com/article/SB10001424127887324432004578302461873792762.html>. Returns were also amped by winning bets on current hedge-fund-saga-du-jour Herbalife<http://www.reuters.com/article/2013/01/09/us-herbalife-loeb-idUSBRE9080W620130109>, and investments in Morgan Stanley, AIG and Greek government bonds.

Loeb stripped out the “Top Winners” listing from Third Point’s February tear-sheet but we know the top positions at the end of February were Yahoo, Virgin Media, Gold, AIG, and Ally Financial. All rose in value, however slightly, between March 1 and March 13, when the fund added 3.3 percent.

Fun fact about the Ultra fund: in its inaugural year, it returned 98.3 percent. That was back in the heady Wall Street days of 1997, when the S&P 500 rose 33.4 percent. In its worst year – 2008 – the levered Ultra tumbled 38.6 percent, when hedge funds on average lost 19.2 percent.


Arlene Busch
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202-333-1880 (w)