REG-Third Point Investors Ltd: Third Point Releases Q1 2025 Investor Letter

Third Point InvestorsAnnouncement

Yesterday 07:02

2 May 2025

Third Point Publishes Q1 2025 Investor Letter

Third Point LLC, the Investment Manager of Third Point Investors Limited
(“TPIL” or the “Company”) announces that it has published its
quarterly investor letter for Q1 2025. The full letter can be accessed at the
Company’s website:
https://www.thirdpointlimited.com/resources/portfolio-updates

 

Highlights
* Third Point’s flagship Offshore Fund (the “Master Fund”) declined 3.7%
in the First Quarter as U.S. tariff announcements and the prospect of a global
trade war weighed on markets. 
* While not unscathed, Third Point weathered these developments by proactively
making opportunistic sales and by taking its net and gross exposures to
multi-year lows. The Investment Manager feels it is currently well positioned
following the addition of several new names selected for the current
environment. 
* Third Point LLC (“Third Point” or the “Investment Manager”) outlined
its view on the macroeconomic environment as well as its new position in
CoStar Group. It also provided updates on the corporate credit and structured
credit portfolios, as well as an update on the integration of Birch Grove, an
alternative credit manager.
 

Performance Key Points
* Third Point returned -3.7% in the Master Fund during the First Quarter of
2025, versus the
-4.3% return of the S&P 500 Total Return Index.
* The top five positive contributors for the quarter were Meta Platforms Inc.,
Rolls-Royce Holdings PLC, Intercontinental Exchange Inc., Phoenix Holdings
Ltd., and Telephone and Data Systems Inc.
* The top five negative contributors for the quarter were Pacific Gas &
Electric Co., TSMC, Carvana Co., Amazon.com Inc., and Danaher Corp.      
 

Outlook and Market Commentary
* The First Quarter began with investor optimism for the Trump
administration’s expected plans for deregulation, improved tax and energy
policy, reduced government spending and a general business-friendly
environment. But by quarter-end, concerns around trade policy turned sentiment
decidedly negative.  
* Over the past few weeks, the administration seems to have mitigated some of
its more aggressive tariff objectives, however, the slowdown in deal-making,
financing, and general economic activity continues. 
* At the time of writing, Third Point awaits details of any individual trade
deals and is working with a wide spectrum of possible economic and market
outcomes until negotiations yield tangible results. 
* The Investment Manager realized gains earlier in the year through
opportunistic sales in Q1 and into Q2 that took its gross and net exposures to
multi-year lows and provided dry powder to deploy at the right time.  
* Third Point increased its investments in event-driven, activist, and risk
arbitrage positions that it feels will perform well in a more turbulent market
environment due to their catalyst-oriented nature (CoStar and U.S. Steel), and
reduced exposure to numerous market-sensitive positions, largely in the tech
and consumer sectors.
 

Position Update
* CoStar Group	* Third Point has long admired this collection of franchises,
which provide the real estate industry with mission-critical data, software,
and services that are designed into workflows and function as a system of
reference. They hold dominant market share, have low market penetration with a
long runway for future growth, have significant untapped pricing power, and
enjoy high-margin business models with ample room for further margin
expansion.  
* Despite the continued strength of its core business, Third Point believes
recent capital allocation decisions have derailed CoStar’s compounding
algorithm. Over the past five years, management has increasingly focused on
leveraging CoStar’s dominance in commercial real estate (CRE) to expand into
residential real estate (RRE). However, this investment has yet to generate
meaningful revenue. Expanding losses at in the RRE business have obscured
rapid growth in the core CRE business and reduced consolidated EBITDA by
approximately 80%.
* During the First Quarter, Third Point engaged with the company with the goal
of helping the company improve its capital allocation framework. CoStar agreed
to add three new directors (all of whom have deep capital allocation
experience), create a Capital Allocation Committee of its Board of Directors
tasked with establishing a rigorous framework for future capital deployment,
and review its executive compensation programs to ensure management’s
incentives remain aligned with stockholder value creation.
* While results will not be immediate, Third Point expects to see a meaningful
improvement in capital allocation by YE 2025. As its core business continues
to compound and improved capital allocation starts to narrow losses in RRE,
the Investment Manager believes the company can grow EBITDA by a factor of
more than 7x over the next few years.
 

Credit Updates
* Corporate Credit	* Third Point’s corporate credit portfolio was down about
30 basis points on a net basis for the quarter. Credit markets were relatively
strong the first two months of the year, but fell back alongside equity
markets in March as tariff rhetoric began to crystalise into action. 
* Third Point remains invested in relatively liquid names with larger
capitalisations that the Investment Manager believes gives these companies
more levers to pull when capital markets become difficult. 
* It expects to see more compelling opportunities in the months ahead as the
market digests the tariff impact on leveraged borrowers. Third Point has a
track record of capitalising on these types of dislocations by deploying
capital in credit. 
	
* Structured Credit	* Third Point’s structured credit portfolio returned
1.1% on a net basis for the quarter, helped by its exposure to fixed rate
residential mortgages, which remained resilient even as credit spreads started
to widen later in the quarter. 
* Third Point continues to believe residential mortgages offer a compelling
risk/reward, as borrowers have a significant level of equity in their homes
and more stable to lower rates should be a tailwind for this exposure. 
* Elsewhere in structured credit, Third Point is seeing opportunities begin to
emerge in CLOs, as price volatility will cause some CLO managers to become
forced sellers.   
 

Birch Grove Integration & Private Credit Launch
* In February, Third Point completed its acquisition of Birch Grove, a
diversified credit asset manager. Integrating Birch Grove into Third Point
brought over $8 billion of new capital invested in CLOs, private credit, and
other strategies, as well as a talented and experienced team.
* The anticipated synergies of this transaction are beginning to manifest in
Third Point’s private credit division, which expects to launch several
different tailored strategies starting in Q2. 
* Third Point believes that its edge comes from its collaborative culture and
ability to allocate flexibly between equities and credit depending on the
market environment. Third Point will celebrate on June 1 the 30th anniversary
of the date in 1995 when it launched as a distressed debt fund, before
evolving to include the many strategies it incorporates into the main fund
portfolio today.
* Bringing more perspectives into the credit side of the business has already
invigorated its views on credit opportunities. Birch Grove’s team of CLO
analysts brings a wealth of knowledge about the debt profiles of individual
companies and sectors and offer insights into our main fund equity research
process. 
 

 

Press Enquiries

 Third Point Elissa Doyle, Chief Communications Officer and Head of ESG Engagement edoyle@thirdpoint.com Tel: +1 212-715-4907  Burson Buchanan  Charles Ryland charlesr@buchanan.uk.com Tel: +44 (0)20 7466 5107 Henry Wilson henryw@buchanan.uk.com Tel: +44 (0)20 7466 5111  

 

Notes to Editors

About Third Point Investors Limited

www.thirdpointlimited.com

Third Point Investors Limited (LSE: TPOU) was listed on the London Stock
Exchange in 2007 and is a feeder fund that invests in the Third Point Offshore
Fund (the Master Fund), offering investors a unique opportunity to gain direct
exposure to founder Daniel S. Loeb’s investment strategy. The Master Fund
employs an event-driven, opportunistic strategy to invest globally across the
capital structure and in diversified asset classes to optimize risk-reward
through a market cycle. TPIL’s portfolio is 100% aligned with the Master
Fund, which is Third Point’s largest investment strategy. TPIL’s assets
under management are currently approximately $500 million.

 

About Third Point LLC

Third Point LLC is an institutional investment manager that actively engages
with companies across their lifecycle, using dynamic asset allocation and an
ethos of continuous learning to drive long-term shareholder return. Led by
Daniel S. Loeb since its inception in 1995, the Firm has a 68-person
investment team, a robust quantitative data and analytics team, and a deep,
tenured business team. Third Point manages approximately $19.3 billion in
assets for sovereign wealth funds, endowments, foundations, corporate & public
pensions, high-net-worth individuals, and employees.



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