Hedge fund manager Dan Loeb warned investors against expecting unrealistic returns if they’re counting on investing in energy companies on the cheap, Bloomberg reported Feb. 27.

“All of the funds that have been set up to capitalize on distress in the oil patch might be disappointed, kind of like European funds that were set up to capitalize on European distressed-debt situations,” Loeb said Feb. 27 in a conference call discussing results at Third Point Reinsurance Ltd., the Bermuda-based reinsurer that he co-founded.

Investors including Leon Black’s Apollo Global Management LLC have sought to temper investor expectations, even as they raise funds to prepare for further disruption in the energy market. Oil prices are poised to climb in February after seven straight monthly declines.

Loeb said that in the energy industry, he’s focused on companies like refiner Phillips 66 (NYSE: PSX), where he believes price fluctuations have been “exaggerated.” The Houston-based company fell from a peak of almost $88 in September to a 2014 low of $64.02 in December. The stock traded at $79.96 at 9:49 a.m. on Feb. 27 in New York.

“When the equities themselves sold off hardest, we were trying to be patient and wait for the inevitable next shoe to drop,” Loeb said. “But equities have already moved up in anticipation of the recovery. We’re pretty much on the sidelines in energy.”