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Hedge fund Third Point said on Thursday that it shifted much of its capital into credit investments after panic selling sparked by the coronavirus outbreak took a toll on its stock-heavy fund, with one of its portfolios losing 16% in the first quarter.

The firm, run by billionaire investor Daniel Loeb, told clients in a letter seen by Reuters that it invested $2.2 billion in structured and corporate credit securities in mid-March, essentially doubling its exposure.

Third Point, which had $16 billion under management at the end of December, said it had not adequately prepared for a possible full-blown pandemic and was caught flat-footed when the world was essentially shut down to blunt the virus’ spread. Its heavy bets on stocks, especially in the aerospace, airline and auto-related sectors, contributed over one-third of the losses in the first quarter, Third Point said.

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The fund said it cut its stock exposure by roughly 15% soon after the selloff began by adding hedges and reallocating capital to fresh credit situations.

“We are pleased with how we have shifted the portfolio,” the letter said. “We particularly like credit where we know that our coupons will be paid,” it added

The fund does not look for a quick rebound and said it is bracing for at two least difficult quarters with “painful volatility” ahead.

Third Point, which can invest in virtually all types of instruments, is also known as a powerful activist shareholder and is currently pushing for change at a number of companies ranging from British insurer Prudential Plc to Japanese conglomerate Sony Corporation.

The firm is sticking with those bets, saying, “We have high conviction in our activist and other equity positions over the long run.”

Third Point said it has been holding talks with Prudential’s board and management and believes “they are considering all options to create more value for Prudential plc, including a full separation of Jackson National.”

It urged the company to move forward swiftly even in the current more difficult market environment.

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Third Point is also pushing for speed at eye wear maker EssilorLuxottica, which has suffered through a sharp stock selloff as stores were closed. Much of its business is based in Italy, which has been especially hard hit by the virus.

Sony is in a strong position to weather the crisis because it has a net cash balance sheet and large equity investments that could be easily monetized and its Sony Gaming business is benefiting from people looking for entertainment at home, Third Point said.

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