Third Point changes strategy on activist investors in bid to fix discount
Hedge fund Third Point has appointed a duo of activist investors to its board in a bid to close the trust’s wide gap between its net asset value and share price, despite previously strongly opposing previous action from other activist investors.
In a stock exchange notice today, the trust’s board said that it would be beginning a six-month strategy review led by activist investor Dimitri Goulandris, but stressed it was not putting itself up for sale.
The hedge fund has a troubled history with activist investors pressuring it to make changes, with Third Point boss Dan Loeb describing them as a “stain” in 2021.
Chair of Third Point Steve Bates stepped down from the company that year, claiming that he had received personal threats from activist investors during meetings.
Third Point released a statement on the resignation which said: “One of the activists resorted to making personal threats against Steve Bates, namely that should he refuse to accede to their proposals, they would attack him in other business areas.”
Loeb called the activist investors a “stain on institutional investors” and said their “juvenile antics smack of desperation and inexperience”.
The hedge fund is currently at a 17 per cent discount, despite its share price rising 18 per cent in the last year.
Last week, the trust was forced to trigger a 25 per cent tender offer after its discount sat at more than 10 per cent over the last six months.
Goulandris and activist investor Liad Meidar, alongside existing director Richard Boléat, will join a newly formed strategy committee to fix the problem.
The committee will explore all options including offensive M&A opportunities, investment strategy mixes, corporate continuation votes or further tenders, and others.
Peel Hunt investment trust analyst Markuz Jaffe said the move brought “increasing comfort that the board is taking the issue of a persistent discount seriously”.
“However, should the 2024 redemption offer be taken up in full, which at current discount levels seems likely in our view, we are also mindful that at current price levels, Third Point’s market capitalisation would drop closer to about £330m – potentially causing greater challenges around scale for current and prospective investors,” he added.