One of the biggest no-brainer buys of the March 2020 COVID-19 market crash for me was Pershing Square Holdings (OTC: PSHZF).
When I wrote to you about it back then, I explained that the investment case for Pershing Square Holdings was simple.
Pershing held $28 per share worth of high-quality investments. It was trading at just $18, which was a 36% discount to those assets.
And it is run by Bill Ackman, who has proven over decades to be a terrific investor.
Here was an opportunity to buy a portfolio of excellent stocks for $0.64 on the dollar and have Ackman manage that portfolio for you… a man who had just turned a $27 million investment into $2.1 billion in the prior month alone!
Since then, Pershing Square’s share price has more than doubled.
And there is plenty of upside left…
Today, I want to introduce you to another opportunity that is very similar to the one we had with Pershing Square Holdings. That way, when the next market crash comes, you’ll know just what to buy…
Invest Like the Ultra-Rich, Only Better
There are a lot of hedge funds out there today, but only a few good ones.
Getting into these hedge funds is virtually impossible for most people. The minimum investment required is often $1 million, and many of the funds are closed to new investors.
While investors may not be able to directly invest in the hedge funds themselves, there is a backdoor way to reap the benefits.
Let me explain… The top hedge funds are run by investors who have smashed the market for decades.
These investors have made themselves billionaires and made their investors rich.
Third Point’s Dan Loeb is one of those elite hedge fund managers.
Since its inception in 1996, Loeb’s Third Point hedge fund has generated an annualized return of 15.1% for his investors.
That is his performance after fees, folks.
Before deducting his fees, Loeb’s investment performance is closer to 20% for this 25-year stretch.
Unfortunately, you and I aren’t ever going to be able to invest in his exclusive hedge fund that has huge minimums and is restricted to the ultra-rich.
Instead, we can do better…
We can get into that fund at a discount, scoring a better deal than his ultra-rich investors, through the shares of Third Point Investors (OTC: TPNTF).
This publicly traded entity exists exclusively to invest in Dan Loeb’s Third Point Offshore hedge fund.
The current net asset value of the slice of Loeb’s hedge fund that Third Point Investors owns is $30.74 per share.
Meanwhile, the trading price for Third Point Investors is $27.50.
That means, unlike the ultra-rich investors who pay full price when they invest directly in Dan Loeb’s hedge fund, we get the same exposure at a 10.5% discount.
I like Third Point Investors as an investment today. But what I really wanted to do was put this opportunity on your radar for the next time the stock market goes into a nosedive.
When the stock market tanks, the discount at which Third Point Investors trades at tends to get wider.
During the financial crisis in 2008, Third Point Investors traded at a 40% discount to the value of its underlying assets.
Last spring during the COVID-19 crash, the discount blew out to 30%.
Those were both incredible buying opportunities that allowed investors to get exposure to Dan Loeb’s stellar investing ability and profit from the closing of the massive discount.
From the low point in the spring of 2020, the share price of Third Point Investors is now up almost 250%.
I don’t know when the next market rout is coming, but I do know that I’ll be looking at Third Point Investors when it happens.