While many hedge fund managers have been explaining away some less-than-stellar results, Dan Loeb spent this morning casually admitting that he's sort of killing it lately.
During the second quarter of 2017, Third Point earned +4.6% in the Offshore Fund, bringing total returns for the year to +10.7%. We have generated alpha through good stock picking in an environment that has proven unpredictable, but favorable for our opportunistic style.
But while Loeb was quick to tell investors that they can thank positions in Alibaba and BlackRock for being richer now, they can definitely hold their applause for a certain social-media obsessed Manhattan contractor currently living in The White House:
In our January letter to investors, we shared our view that 2017 would be a year characterized by reflation globally, an end to central bank easing, and a US economy juiced up by the Trump administration’s increased fiscal spending and tax reform. So far, none of these predictions has come to pass. In April’s investor letter, we noted that actions out of Washington would be delayed or even denied, but explained that we remained fully invested because we believed that the emergence of synchronized global growth was more important than the fading “Trump Trade”.
This is not Sony-level Loebian shade but it's definitely a further indication that guys like Dan are pretty dismayed and annoyed by the emotionally violent inertia that colors this batshit administration. Loeb is unsubtly telling investors that he is making despite the Trump administration, a narrative that goes against the Trumpian articles of faith being advanced by the president and his new head propagandist, former "hedge fund manager" Anthony Scaramucci. If billionaire market mavens like Loeb are nonplussed by MAGAnomics, that is terrible news for a White House already staring down the barrel of an increasingly difficult fight on tax reform.
But today of all days provides us with another optic through which to view the growing schism between hedge fund titans and the Trump White House.
Taking into consideration that Loeb and Paul Singer co-founded and funded a non-profit to advance LGBT rights, it stands to reason that Trump will begin to see outright criticism from prominent fund managers who are not seeing the growth they wanted and are wildly disinterested in politically-motivated culture wars that come from tweetstormed announcements banning transgendered people from the U.S. military in an effort to solve a problem that Pentagon wasn't aware existed.
With a legislative record of nothing and an economy that many feel is teetering on the brink of something unpleasant, Trump cannot afford to anger the checkbooks of Dan Loeb and his professional frenemies. Midterm elections are coming up and the GOP has spent a decade allowing private money to gain an unprecedentedly powerful role in our politics, meaning that hedge fund managers (who Republicans have always felt confident counting in their number) could turn on the party and pour millions into races that would flip Congress and put a stranglehold on a perpetually inchoate Trump agenda. That idea seemed ludicrous a few months ago but we now live in a reality that includes an increasingly unhinged Commander-in-Chief and Democratic party leadership that has consistently voiced interest in working on legislation like massive infrastructure spending and corporate tax reform.
Right now Dan Loeb is beating the S&P, he might soon be beating down the Trump administration.