Billionaire Dan Loeb is ‘closely watching’ these 4 key risks that can stop the market rally
* Third Point's Dan Loeb shares his key concerns for the market in a note to clients Monday.
* "Although we do not fear a recession now, 'event risks' need to be considered," he writes.
The best hedge fund managers are always looking out for potential downside when they put together a portfolio. Third Point's Dan Loeb, who nearly doubled the S&P 500's return for more than two decades, shared his key concerns for the market in a note to clients Monday.
"While we remain optimistic about the trajectory of the economy and markets, we have weighed our positioning with an acute awareness of the risks," Loeb wrote. "Although we do not fear a recession now, 'event risks' need to be considered."
Unlike many of his well-known hedge fund peers, Loeb was able to generate strong returns last year.
Loeb's hedge fund,Third Point Offshore, was up 18.1 percent in 2017 compared with the S&P 500's 21.8 percent gain, according to an investor letter. From inception in 1995 to 2017, the fund generated annual returns of 15.8 percent versus the market's 8.2 percent.
But the hedge fund manager said he is wary of four potential issues for the market he is "closely watching:"
Loeb said his fund's portfolio is "well-positioned" even under these risks due to its bets against stocks through short-selling and the "event-driven" nature of his investments.