(Bloomberg) -- Dan Loeb’s Third Point LLC gained 17.1% last year boosted by a wager on Campbell Soup Co.
Third Point was able to overcome skepticism that it could turnaround “what most thought was a moribund and declining business,” the firm said in a letter dated Jan. 30.
Campbell shares rose 50% last year, prompting the hedge fund to take some profits and reduce its position to below 5% of the company. Third Point though remains bullish. The business has been stabilized, and a compelling turnaround is underway, Third Point said.
The fund also made money on Sony Corp (T:6758)., betting on its collection of media assets, including its giant video game platform, Hollywood studio and an underappreciated semiconductor business, the firm said.
The fund was punished by an outsized position in Argentine government debt after failing to predict the politics.
“We realize in hindsight that we took our guard down a bit too much and did a poor job of calculating both the political risk and the reflexive reaction of the dollar-denominated debt to the collapse of the local currency,” the letter said.
Third Point was also hit by its short positions, something many hedge funds struggled with as the S&P 500 Index rallied almost 29% -- its best year since 2013. Hedge funds broadly gained 7.8% in 2019, according to Hedge Fund Research.
The new year has kicked off positively as friendly monetary conditions and a “benign” economic backdrop drove the market higher, Third Point said in the letter. The firm remains wary of a number of factors that could upset this, including the spread of the coronavirus, derailment of trade negotiations with China, and the U.S. election.
(Updates to include details on credit wagers in fifth paragraph.)