(Bloomberg) — Third Point LLC expects to boost its exposure to company debt in the coming weeks, as it looks to capitalize on dislocations brought on by tariff-related volatility.
The hedge fund owns bonds from bigger companies with relatively liquid debt, and that have “more levers to pull” when markets grow tumultuous, Daniel Loeb, the firm’s chief executive officer, wrote in a letter to investors.
“This current selloff is unique: it is self-inflicted, but we expect it will offer bargains like all other dislocations,” Loeb wrote. “We have a long track record of capitalizing on these opportunities in corporate credit.”
Third Point has seen five major dislocations since 2008, and generally boosts its corporate credit exposure during those periods, according to the letter. While the firm tends to lose money on credit coming into dislocations, it earns multiples back afterward, Loeb wrote.
Credit markets went for a roller-coaster ride in April, as policy changes brought investors to recalibrate their risk tolerance. Risk premiums and yields climbed rapidly before reversing course, while measures of perceived risk rose by levels not seen since the regional banking crisis two years ago.
Third Point has been broadly looking to grow its presence in credit markets. In 2023, the firm hired Chris Taylor to help build its direct lending business. And in March it said it closed on its acquisition of Birch Grove, an alternative credit manager.
In its quarterly letter, Third Point also said:
–With assistance from Carmen Arroyo.
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