By Sherman Lee The S&P 500 Index returned +0.80% during the first quarter after getting off to a bad start with a 3% decline in January. Interest rates continue to hover at near-zero levels as the US Federal Reserve has been reluctant to raise the short-end interest rate.
Meanwhile, long-term rates have declined across the globe with the exception of Greece due to its weak finances. The creditworthiness of Greek debt has been in question for some time. The country may need leave the euro and return to the drachma. In Europe and Japan, central banks are hoping that quantitative easing programs can kickstart their economies.
China has opened up its stock exchanges in Hong Shanghai exchanges. Kong and A new program is giving foreigners greater access to China's mainland 'A' shares through the Hong Kong exchange. In addition, mainlanders are getting access to Hong Kong listed shares through the Shanghai exchange.
During the first quarter, I was a net buyer, initiating six new positions and adding to one existing position in the Prudent Value portfolio. Our biggest acquisition in the quarter was Third Point RE (TPRE).
TPRE is a Bermuda-based specialty property and casualty reinsurance company. The company operates in two segments: Property and Casualty Reinsurance and Catastrophe Risk Management. TPRE also owns investments, which are held in a separate account and managed by Third Point LLC on substantially the same basis as its main hedge funds. The company's investment manager is managed by Third Point LLC, which is wholly owned by Daniel S. Loeb. Third Point Partners L.P., which is Third Point LLC's oldest fund, has reported a compounded annualized return of approximately 21% (net of fees) from its formation in June 1995 through December 31, 2012.