Third Point Hedge Fund Seeks to Raise More Than $500 Million

(Bloomberg) -- Billionaire Dan Loeb’s Third Point is seeking to raise more than $500 million for a new hedge fund to wager on structured credit markets which imploded during the coronavirus market turmoil.

The Third Point Structured Credit Opportunities Fund started fund raising on June 1 and has collected about $380 million, according to an investor update seen by Bloomberg. A spokesman for the New York-based investment firm declined to comment.

The structured-credit market went into a tailspin in March, with some hedge funds invested in the market losing as much as 50%. Firms including Medalist Partners, EJF Capital and Prophet Capital Asset Management froze redemptions from their funds to avoid fire sales of assets. At the same time, many firms have started funds to take advantage of the dislocation.

“In under three weeks, we saw a price decline in structured credit that took over nine months to achieve during the global financial crisis,” Third Point told investors in April while disclosing the plan to start the fund.

The new fund will mainly invest in residential mortgages, consumer credit, consumer real estate and collateralized loan obligations. Investors’ cash is locked in for one year and the fund is aiming to return as much as 20% annually.

It can leverage its bets by one-and-a-half times, won’t charge any fixed fees but take a 20% cut from performance generated, according to the document.

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