Dan Loeb Says He Was Too Cautious During October Rally

Dan Loeb is the founder and manager at Third Point. He is well known for big and successful investments.

Dan Loeb Too Cautious on October Rally

The thing is Dan Loeb is such a successful hedge fund manager because his eye is on hedging his fund’s risk. So, while October was a great month for stocks, Loeb’s Third Point didn’t get to reap much of that benefit. “We only gradually increased our exposures near the market bottom and thus underperformed during the dramatic rise in October,” said Loeb in a letter to investors. “While we have not generated significant gains this year, we have protected capital and exhibited materially lower volatility than the markets.”

Hedge Fund Perfomance in October

The October rally was the first opportunity for solid upside after what was “one of the worst three-month periods in the $2 trillion hedge fund industry’s history,” reports Reuters. Several big hedge fund managers, like John Paulson and Lee Ainslie “saw fund returns plunge into double-digit losses during the third quarter.” Dan Loeb’s Third Point was no exception. “Loeb’s flagship Third Point Ultra fund declined 6 percent in the third quarter, but less than the broader stock market, which dropped 9.5 percent.”