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Dan Loeb, the billionaire founder of hedge fund Third Point, has offered a candid assessment of two very different bets: a roughly $60 million investment in FTX that went to zero, and debt positions in Elon Musk’s X and xAI that became meaningful profit drivers.
Third Point’s Q4 2025 investor letter highlighted the Musk-linked debt investments as significant contributors to the fund’s performance, buoyed in part by the announced merger between xAI and SpaceX. Meanwhile, the FTX chapter remains a painful reminder that even the sharpest institutional investors can get taken for a ride.
The $60 million lesson
Third Point participated in FTX’s funding rounds during 2021, when the crypto exchange was the industry’s golden child. The firm wasn’t alone. Sequoia Capital, Paradigm, and a parade of other blue-chip investors poured money into Sam Bankman-Fried’s operation, collectively endorsing FTX as the future of digital asset trading.
Then November 2022 happened. A liquidity crisis unraveled FTX in a matter of days, and the exchange filed for bankruptcy. Bankman-Fried was subsequently convicted of fraud and conspiracy charges, and Third Point’s roughly $60 million equity stake was valued at exactly nothing.
Loeb has acknowledged being fooled by Bankman-Fried, a rare public admission from a hedge fund manager who has spent decades cultivating a reputation for rigorous analysis.
The Musk trade that worked
If FTX was Loeb’s cautionary tale, his Musk-related positions became the redemption arc. Third Point’s investor letter for Q4 2025 pointed to large debt investments in X, the platform formerly known as Twitter, and xAI as key performance contributors.
The distinction matters. Third Point didn’t buy equity in these companies. It bought debt, a fundamentally different risk profile. Debt investors get paid before equity holders. They don’t need a company to become the next trillion-dollar juggernaut. They just need it to stay solvent and service its obligations.
The announced merger between xAI and SpaceX added further tailwind. That deal, which would combine Musk’s artificial intelligence venture with his rocket company, was specifically noted as a positive development for Third Point’s portfolio.
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