REG-Third Point Investors: Annual Financial Report
26/04/2022 07:15
26 April 2022
Third Point Investors Limited (the "Company")
ANNUAL REPORT & AUDITED FINANCIAL STATEMENTS FOR THE year ENDED 31 DECEMBER
2021
31.1% share price return
Third Point Investors Limited, the London-listed, multi-strategy investment
company managed by Third Point LLC (the "Investment Manager"), is pleased to
announce Full Year results for the year ended 31 December 2021.
Financial Highlights – Strong performance in a landmark year
* The Company generated a 31.1% share price return during the period under
review, outperforming both the S&P 500 and the MSCI World Index
* Company NAV return was 23.6%
* The share price discount to NAV reduced from 19% to 14% over the year with
discount control management measures proactively implemented
* Post period-end the discount to NAV has further reduced to 11% as at 25
April 2022
Operational Highlights – Execution of strategic initiatives
* Ongoing $200m three-year share buyback programme * In 2021, 3.1 million
shares were repurchased at an average discount of 16.5%, adding 46 cents per
share to NAV
* Introduction of a revolving credit facility to provide modest gearing
exposure
* Increased upper limit exposure of attractive private market opportunities to
20% NAV
* Commitments to tender offers in 2024 and 2027 if the discount is wider than
10% and 7.5%, respectively
* Establishment and execution of an innovative exchange facility into the
Master Fund
Rupert Dorey, Chair of the Company commented:
“We are delighted to present this strong performance for the year when the
Company demonstrated its potential to perform well in a wide range of market
conditions. The creative and proactive measures introduced by the Board with
the ambition to increase investor demand and reduce the discount closer to NAV
proved effective: however, there is more work to do and we look forward to
continuing to work to reduce this valuation gap further..
Looking ahead, it is clear that uncertain equity market conditions are set to
prevail with widespread inflation, raised geopolitical tensions and an
environment of increasing interest rates. Historically, periods of market
dislocation have tended to favour the flexible and unconstrained approach of
the Investment Manager to follow convictions across activism, event and
fundamental equity, corporate credit, structured credit and private markets.
Through this proven, flexible investment approach we hope to preserve and grow
value for shareholders”
Press Enquiries
Buchanan PR
Charles Ryland / Henry Wilson charlesr@buchanan.uk.com / henryw@buchanan.uk.com Tel: +44 (0)20 7466 5107 / 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 $900 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 36-person investment team, a robust quantitative data and analytics team, and a deep, tenured business team. Third Point manages approximately $16.0 billion in assets for sovereign wealth funds, endowments, foundations, corporate & public pensions, high-net-worth individuals, and employees.
Chairman’s Statement
Dear Shareholder,
Navigating a volatile but ultimately robust year for global markets, Third
Point Investors Limited (the “Company”) net asset value (NAV) per share
rose 23.6% in 2021, sitting between the 22.4% return of the MSCI World Index
and the 28.7% return of the S&P 500. Share price performance of 31.1% outpaced
broader markets, however, spurred on by the narrowing of the Company’s
discount to NAV from 19% to 14% over the course of the year.
Markets had much to cheer during 2021. Widespread vaccinations and global
travel restrictions blunted the force of new COVID-19 variants, and asset
prices were buoyed by continued extraordinary monetary and fiscal support from
central banks globally. However, as the year progressed, attention diverted
from public health to inflation and interest rates, as market participants
began to look out to a future in which fiscal and monetary support would need
to be curtailed to stem excess liquidity.
Portfolio Drivers
Against this uncertain backdrop, the Investment Manager’s flexible,
multi-asset approach thrived. Outside of short public equity positions, which
predictably were a drag on performance, each of long public equity, corporate
and sovereign credit, structured credit, and private categories contributed to
the Company’s return.
Among individual contributors, the Investment Manager’s expertise in
shepherding private companies to the public markets stood out: lender Upstart
Holdings Inc. and cybersecurity company SentinelOne Inc. have been two of
Third Point’s most successful investments in its 25+ year history. Upstart
went public in December 2020 and excitement about its proprietary AI-powered
underwriting process propelled shares to a more than 270% gain in 2021.
SentinelOne, which develops autonomous solutions for endpoint cybersecurity,
similarly held a successful IPO in June 2021. Third Point’s venture arm led
expansion stage funding rounds for these companies in 2015 and advised them on
go-to-market strategy, talent acquisition and capital markets, culminating in
their public listings.
Third Point’s deep expertise in managing assets across the corporate
lifecycle and capital structure, is one of its differentiating features and
was behind the Board’s decision taken during the year to allocate an
increased proportion of the Company’s investment in Third Point Offshore
Fund, Ltd. (the “Master Fund”) to venture capital holdings.
While Fundamental Equity positions were the top aggregate source of
contribution, not all positions were successful, especially those which
grappled with a reversion after a strong 2020 or those which suffered from a
slower-than-expected emergence from COVID-19 headwinds. The most impactful of
these were holdings in payments provider Paysafe Ltd. and mobility company
Uber Technologies Inc.
Structural Enhancements and Discount Management
As shareholders are now well aware, in April 2021 the Board announced further
measures to accentuate the unique features of the Company and to endeavour to
combat the persistent discount to NAV at which shares trade. These new
measures include:
• A tender for 25% of outstanding shares at a
discount of 2% in March 2024 and March 2027 if the discount is wider than 10%
and 7.5%, respectively, the six months prior to the tender submission
notification date;
• Two iterations of an innovative exchange
facility into the Master Fund, the most recent of which was held in March 2022
allowed eligible investors to convert their shares at a 2% discount to the
prevailing NAV per share;
• Increased exposure to private market
opportunities of up to 20% of NAV;
• The introduction of gearing, using a revolving
credit facility, intended to facilitate an ability to increase exposure at
times of increased opportunity, without an increase in management fees.
These measures, of course, are intended to augment the existing $200 million,
three-year share buyback programme implemented in 2019. As part of this
programme, in 2021 the Company repurchased 3.1 million shares with a value of
approximately $79.0 million, at a weighted average discount to NAV of -16.5%.
This had the effect of accreting 46 cents per share to NAV.
Taken together, and in concert with strong fund performance, these measures
have served to help narrow the discount – from about 25% at the time that
the new measures were announced to about 14% by year-end. The Board will
continue to consult with shareholders to find ways to sustain this momentum,
and will continue to review its strategy to further narrow the discount from
current levels.
Requisitions
During the year the Company was served with a total of three requisitions for
EGMs by a consortium of four shareholders, none of which were ultimately
successful. A further requisition was served in January 2022 which resulted in
detailed engagement with the requisitionists about the structure of the Board.
In February, both the Company and the requisitionists came to a mutually
agreed position to strengthen the Board, further endorsing its independence
and capability.
Board
On behalf of the Board, I would like to extend my sincere thanks to Steve
Bates who resigned as Chairman in December 2021. Steve was a hugely capable
figure who commanded widespread respect from shareholders and the Board alike.
His premature departure was a great loss to the Company, and we thank him
sincerely for his unremitting service. We wish him every good fortune in his
future endeavours.
The Company was pleased to announce in February 2022 the appointment of two
new independent Directors to the Board following a detailed search process
conducted through independent search consultants. The Board warmly welcomes
Richard Boléat and Vivien Gould, both of whom bring with them enormous
experience in the Investment Trust sector and are well recognized figures in
the investment community.
Simultaneously, after a short period as Acting Chairman, I was formally
appointed as Chairman of the Board, and look forward to leading the Company
with a refreshed and immensely competent and experienced Board, who are all
motivated to further advance the continuing success of the Company.
Outlook
Economic and political shudders at the end of 2021 transitioned into
convulsions in early 2022, as markets came to terms with more persistent
inflation, an accelerated pace of monetary tightening and the contraction of
fiscal stimulus, as well as heightened geopolitical tensions, most
particularly with the Russian invasion of Ukraine. While the path forward is
uncertain, it seems clear that we are in the midst of a rising rate
environment in both real and nominal terms – an unfamiliar landscape for
many investors – and can expect greater disparities in asset classes,
factors, and individual securities.
As an experienced risk taker and astute asset allocator, Third Point LLC (the
“Investment Manager”) has the tools to pivot accordingly. It has already
begun doing so, having trimmed its public equity net exposure over the course
of Q4 2021 and into Q1 2022 from a high of almost 80% to below 50% at the time
of writing – mostly through sales of secular growth equity positions whose
multiples are more at risk as rates march higher. Having enjoyed success in
2021 through the strong performance of growth-oriented names, the portfolio
today is significantly more balanced, with a cybersecurity company, a
utilities company and an energy company among its top five positions.
Elsewhere, the pace of technological innovation has only continued to
accelerate, and the Investment Manager is still finding companies early in
their trajectory that have the potential to mature into the next generation of
disruptors. Notably, Third Point’s venture team focuses its efforts on
expansion stage opportunities, where the risks skew more to scaling rather
than valuation. In both corporate credit and structured credit, the Investment
Manager believes rate fears will create some interesting opportunities and
stands ready to deploy capital should equity volatility transition to credit
volatility in a more meaningful way.
This diversity of potential drivers – activism, event and fundamental
equity, corporate credit, structured credit, private markets – on which the
Investment Manager can capitalise should serve the Company well as we head
into more uncertain times. The Board hopes that it can complement this
attribute with a continued commitment to the highest standards of governance
whilst addressing the persistent discount in a way that preserves the
Company’s unique value proposition as well as paving the way towards
broadening and deepening the shareholder base.
Rupert Dorey
25 April 2022
Strategic Report
The Directors submit their Annual Report, together with the Statement of
Assets and Liabilities, Statement of Operations, Statement of Changes in Net
Assets, Statement of Cash Flows and the related notes of Third Point Investors
Limited (the “Company”) for the year ended 31 December 2021 (“Audited
Financial Statements”). These Audited Financial Statements have been
properly prepared, in accordance with applicable Guernsey law and accounting
principles generally accepted in the United States of America, and are in
agreement with the accounting records.
The Company
The Company was incorporated in Guernsey on 19 June 2007 as an authorised
closed-ended investment scheme and was admitted to a secondary listing
(Chapter 14) on the Official List of the London Stock Exchange (“LSE”) on
23 July 2007. The proceeds from the initial issue of shares on listing
amounted to approximately US$523 million. The Company was admitted to the
Premium Official List Segment (“Premium Listing”) of the LSE on 10
September 2018.
The shares of the Company are quoted on the LSE in two currencies, US dollars
and Pounds Sterling. The Company is a member of the Association of Investment
Companies (“AIC”).
Investment Objective and Policy
The Company’s investment objective is to provide its Shareholders with long
term capital appreciation utilising the investment skills of Third Point LLC
(the “Investment Manager”, “Manager”, or “Firm”) through
investment of all of its capital (net of short term working capital
requirements) in Shares of Third Point Offshore Fund, Ltd (the “Master
Fund”), an exempted company formed under the laws of the Cayman Islands on
21 October 1996.
The Master Fund is a limited partner of Third Point Offshore Master Fund L.P.
(the “Master Partnership”), an exempted limited partnership under the laws
of the Cayman Islands, of which Third Point Advisors II L.L.C., an affiliate
of the Investment Manager, is the general partner. Third Point LLC is the
Investment Manager to the Company, the Master Fund and the Master Partnership.
The Master Fund and the Master Partnership have the same investment
objectives, investment strategies and investment restrictions.
The Master Fund and Master Partnership’s investment objective is to seek to
generate consistent long-term capital appreciation, by investing capital in
securities and other instruments in select asset classes, sectors, and
geographies, by taking long and short positions. The Investment Manager’s
implementation of the Master Fund and Master Partnership’s investment
policies is the main driver of the Company’s performance. The Audited
Financial Statements of the Master Fund and the Audited Financial Statements
of the Master Partnership, should be read alongside the Company’s Audited
Financial Statements, but do not form part of them.
The Investment Manager identifies opportunities by combining a fundamental
approach to single security analysis with a reasoned view on global, political
and economic events that shapes portfolio construction and drives risk
management.
The Investment Manager seeks to take advantage of market and economic
dislocations and supplements its analysis with considerations of managing
overall exposures across specific asset classes, sectors, and geographies by
evaluating sizing, concentration, risk, and beta, among other factors. The
resulting portfolio expresses the Investment Manager’s best ideas for
generating alpha and its tolerance for risk given global market conditions.
The Investment Manager is opportunistic and often seeks a catalyst that will
unlock value or alter the lens through which the broad market values a
particular investment. The Investment Manager applies aspects of this
framework to its decision-making process, and this approach informs the timing
of each investment and its associated risk.
During the year, the Company had substantially all of its holding in the
Master Fund in share class N. This share class attracted a management fee of
1.50% and the Company also qualified for an additional reduction in the
management fee based on its size and longevity as an investor in the Master
Fund. As a result, the Company has paid a management fee of 1.25% per annum in
share class N.
The Class N share class is subject to a 25% quarterly investor level
redemption gate.
In connection with taking out the loan facility announced on 1 April 2021, on
1 September 2021, the Company exchanged its holding in Class N Shares for an
equivalent holding in Class Y Shares which offers principally the same terms
as Class N Shares save for increased liquidity if there is an event of default
under the terms of the loan agreement.
Any Ordinary Shares bought for the Company’s account (e.g. as part of the
buyback programme) traded mid-month will be purchased and held by the Master
Partnership until the Company is able to cancel the shares following each
month-end. Shares cannot be cancelled intra-month because of legal and
logistical factors. The Company and the Master Partnership do not intend to
hold any shares longer than the minimum required to comply with these factors,
expected to be no more than one month.
Results and Share Buybacks
The results for the year are set out in the Statement of Operations.
As a means of capital return, on 26 September 2019, the Board announced the
implementation of a share buyback programme worth $200 million, with share
purchases being made through the market at prices below the prevailing NAV per
share. The scale of the buyback is designed to reduce the discount to net
asset value, contain discount volatility and provide liquidity to the market.
Meanwhile, the Company’s returns will be bolstered by the accretion to NAV
from buybacks. In the year to 31 December 2021, the total number of shares
which had been bought back was 3,100,000, with an approximate value of $79
million. The average discount at which purchases were made was -16.5%. The
buybacks effected during the year led to an accretion to NAV per share of 46
cents.
Key performance indicators (“KPI’s”)
At each Board meeting, the Board considers a number of performance measures to
assess the Company’s success in achieving its objectives. Below are the main
KPI’s which have been identified by the Board for determining the progress
of the Company:
• Net Asset Value (NAV);
• Discount to the NAV;
• Share price; and
• Ongoing charges.
Viability Statement
In accordance with principle 31 of the UK Corporate Governance Code, published
by the Financial Reporting Council in July 2018 (“The Code”), the
Directors have assessed the prospects of the Company over the three year
period to 31 December 2024. The Directors consider that three years is an
appropriate period based on a review of the Company’s investment horizon,
anticipated cash flows, management arrangements as well as the liquidity of
the Company’s investment in the Master Fund.
The Company’s performance and operations depend upon the performance of the
Master Fund and the Directors, in assessing the viability of the Company, pay
particular attention to the risks facing the Master Fund.
The Directors acknowledge the two year notice period of the Investment Manager
serving notice under the Management Agreement. To mitigate against this risk,
the Directors meet regularly with the Investment Manager to review the
Company’s performance, and closely monitor the relationship with the
Investment Manager.
In its assessment of the viability of the Company, the Directors have carried
out a robust assessment of the principal risks facing the Company as set out
in the Directors’ Report, and believe that the Company is well placed to
manage these risks, having taken into account the current economic outlook.
The Directors, having considered the risks and reviewed ongoing budgeted
expenses, have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due. The Directors
confirm their belief that the Company will remain viable for the period to 31
December 2024.
Section 172 Statement
Section 172 of the Companies Act 2006 (“UK Companies Act”) applies
directly to UK domiciled companies. Nonetheless, the intention of the AIC Code
is that the matters set out in section 172 are reported on by all London
listed investment companies, irrespective of domicile, provided that this does
not conflict with local company law.
Section 172 states that: A director of a company must act in the way he or she
considers, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the following six items:
(a) the likely consequences of any decision in the long term, In managing the Company, the aim of the Board and the Investment Manager is always to ensure the long-term sustainable success of the Company and, therefore, the likely long-term consequences of any decision are a key consideration. In managing the Company
during the year under review, the Board acted in the way which it considered, in good faith, would be most likely to promote the Company’s long-term sustainable success and to achieve its wider objectives for the benefit of Shareholders as a whole, having
had regard to the Company’s wider stakeholders and the other matters set out in section 172 of the UK Companies Act.
(b) the interests of the company’s employees, The Company does not have any employees.
(c) the need to foster the Company’s business relationships with suppliers, customers and others, The Board’s approach is described under “Stakeholders” below.
(d) the impact of the Company’s operations on the community and the environment, The Board’s approach is described under “Environmental, Social and Corporate Governance” below.
(e) the desirability of the Company maintaining a reputation for high standards of business conduct, and The Board’s approach is described under “Culture and Values” below.
(f) the need to act fairly as between members of the Company. The Board’s approach is described under “Stakeholders” below.
Culture and Values
The Directors’ overarching duty is to promote the success of the Company for
the benefit of investors, with due consideration of other stakeholders’
interests. The Company’s approach to investment is explained in the
Investment Manager’s Report. The Board applies various policies and
practices to ensure that the Board’s culture is in line with the Company’s
purpose, values and strategy. The Directors aim to achieve a supportive
business culture combined with constructive challenge.
The Company has a number of policies and procedures in place to assist with
maintaining a culture of good governance including those relating to
diversity, anti-bribery (including the acceptance of gifts and hospitality),
tax evasion, conflicts of interest, and dealings in the Company’s shares.
The Board assesses and monitors compliance with these policies regularly
through Board meetings and the annual evaluation process. The Board seeks to
appoint the most appropriate service providers for the Company’s needs and
evaluates the services on a regular basis. The Board considers the culture of
the Investment Manager and other service providers through regular reporting
and by receiving regular presentations as well as through ad hoc interaction.
The Board also seeks to control the Company’s costs, thereby enhancing
performance and returns for the Company’s Shareholders. The Directors
consider the impact on the community and environment. The Board and Investment
Manager work closely together in developing and monitoring the Company’s
approach to Environmental, Social and Corporate Governance matters.
Stakeholders
The Company is an externally managed investment company whose activities are
all outsourced. It does not have any employees. The Board has identified its
key stakeholders, and how the Company engages with them, in the table below:
Stakeholder Key Considerations Engagement
Shareholders As an investment company, Third Point Investors Limited’s Shareholders are, in effect, both its owners and its customers, obtaining investment returns from the Company. A well informed and supportive Shareholder base is crucial to the long-term sustainability of the Company. Understanding the views and priorities of Shareholders is, therefore, fundamental to retaining their continued support. In considering Shareholders, the Board’s key considerations are: • Overall investment returns; • Controlling the discount at which shares trade to net asset value; and • Control of costs. A detailed explanation of the Company’s approach is set out under Relations With Shareholders. The Board receives regular reports from the Investment Manager and also
independent reports from Numis Securities Limited (the “Corporate Broker”) on relations with, and any views expressed by, Shareholders. A minority of the Company’s
Shareholders petitioned the Board during the year in an attempt to get the Board to follow policies which were in those Shareholders’ interests. The Board engaged with
those Shareholders but continued to follow policies which it considered to be in the best interests of Shareholders taken as a whole.
Investment Manager Management of the Company’s investment is delegated to the Investment Manager. Investment performance is crucial to the long-term success of the Company. The Board engages in regular, open and detailed communication with the Investment Manager. It reviews in detail the overall performance of the Company and its underlying
investment. The relationship with and performance of the Investment Manager is monitored and reviewed by the Management Engagement Committee. In setting investment
management fees, the Board seeks to achieve an appropriate balance between value for money and an incentive to retain a strong and capable portfolio management team along
with supporting staff and infrastructure.
Administrator & Corporate Secretary and other key service providers. The Administrator and Corporate Secretary are key to the effective running of the Company. The Company has a number of other key service providers, each of which provides an important service to the Company and ultimately to its Shareholders. The Administrator and Corporate Secretary attend all Board meetings. The Management Engagement Committee undertakes an annual review of the key service providers,
encompassing performance, level of service and cost. Each provider is an established business and each is required to have in place suitable policies to ensure they
maintain high standards of business conduct, treat customers fairly, and employ corporate governance best practices. All bills and expense claims from suppliers are paid
in full, on time and in compliance with the relevant contracts.
Third Point (the “Investment Manager”) Environmental, Social and
Governance (“ESG”) Policies
The Board has reviewed the ESG policies of the Investment Manager, made up of
the environmental, social, and governance factors considered in the investment
process and the ESG initiatives undertaken within the business itself.
The Investment Manager is a signatory to the United Nations Principles for
Responsible Investment.
Investment Process
In 2020, Third Point started to incorporate ESG evaluation into certain of its
investment strategies. The Investment Manager’s process is designed to
broadly identify ESG issues – both those that may create value and those
likely to destroy it – and, when appropriate, to consider whether to engage
company management in discussion about these topics. These standards are
maintained through a four-step process – from pre-investment checklist to
post-investment tracking – overseen by the Head of ESG Engagement, who stays
abreast of developments in the portfolio and in the ESG community and engages
with the Head of Markets and the investment team on ESG issues.
Assessing Sustainability Risks
Sustainability risk refers to an environmental, social or governance event or
condition that, if it occurs, could cause an actual or a potential material
negative impact on the value of an investment. The Investment Manager
therefore approaches sustainability risk analysis as a process of identifying
potential events that could cause a material negative impact on the value of
its clients’ investments.
The Investment Manager considers environmental, social, and governance events
or conditions as part of the investment process in areas where data
availability allows for analysis, with a focus on risks relating to governance
events or conditions. These are most relevant to the Master Fund, given the
Investment Manager’s history of shareholder engagement. The Investment
Manager has implemented procedures to identify, manage and monitor certain
sustainability risks relating to governance events including:
Identification: The Investment Manager has reviewed the sustainability risks
relating to governance events or conditions which may cause a material
negative impact on the value of its clients’ investments, should those risks
occur.
Management: While the Investment Manager’s portfolio managers and analysts
are provided with information on certain sustainability risks relating to
governance events or conditions, and are encouraged to take such
sustainability risks into account when making an investment decision,
sustainability risk would not by itself prevent the Investment Manager from
making any investment. Instead, sustainability risk relating to governance
events or conditions forms part of the overall risk management process, and is
one of many risks which may, depending on the specific investment opportunity,
be relevant to a determination of risk. However, the Investment Manager does
not apply any absolute risk limits or risk appetite thresholds which relate
exclusively to sustainability risk relating to governance events or conditions
as a separate category of risk.
Monitoring: As part of ongoing monitoring, the Investment Manager’s
portfolio managers may at times engage in Active Ownership. Active Ownership
is the process of communicating with issuers on governance issues, with a view
to monitor or influence governance outcomes within the issuer.
Governance risks are associated with the quality, effectiveness and process
for the oversight of day-to-day management of companies in which the Master
Fund may invest or otherwise have exposure to. Such risks may arise in respect
of the company itself, its affiliates or in its supply chain. While not
exhaustive, the below are examples of the risks that the Investment Manager
seeks to assess:
• Lack of diversity at board or governing body level: the absence
of a diverse and relevant skillset within a board or governing body may result
in less well-informed decisions being made. The absence of an independent
chairperson of the board, particularly where such role is combined with the
role of chief executive officer, may hamper the board’s ability to exercise
its oversight responsibilities, challenge and discuss strategic planning and
performance, input on issues such as succession planning and executive
remuneration and otherwise set the board’s agenda.
• Inadequate external or internal audit: ineffective or otherwise
inadequate internal and external audit functions may increase the likelihood
that fraud and other issues within a company are not detected and/or that
material information used as part of a company’s valuation and/or the
Investment Manager’s investment decision making is inaccurate.
• Bribery and corruption: the effectiveness of a company’s
controls to detect and prevent bribery and corruption both within the company
and its governing body and also its suppliers, contractors and sub-contractors
may have an impact on the extent to which a company is operated in furtherance
of its business objectives.
• Lack of scrutiny of executive pay: failure to align levels of
executive pay with performance and long- term corporate strategy in order to
protect and create value may result in executives failing to act in the
long-term interest of the company.
• Poor safeguards on personal data / IT security (of employees
and/or customers): the effectiveness of measures taken to protect personal
data of employees and customers, and, more broadly, IT and cybersecurity, will
affect a company’s susceptibility to inadvertent data breaches and its
resilience to “hacking.”
ESG at Third Point
The Investment Manager also endeavours to continuously improve and expand upon
its commitment to be a responsible, sustainable, and healthy workplace. Since
its founding in 1995, it has promoted employee wellness, training, and
environmental sustainability, and in 2019 codified these values into its
formal ESG policies. These policies encompass an ongoing commitment to
developing best-in-class standards for environmental, social, and governance
practices. Below are some of the highlights of the internal ESG activities and
initiatives that have been undertaken by the Investment Manager.
Environmental initiatives
Third Point’s reuse and recycling practices focus on recycling plastics and
paper; reducing container waste; and promoting food sustainability.
Third Point’s offices are located at 55 Hudson Yards, which is part of the
first neighbourhood in Manhattan to receive the LEED-Gold certification,
awarded by the United States Green Building Council for its green
infrastructure, public transportation linkages, and pedestrian-friendly
community design. The neighbourhood operates on a first-of-its-kind microgrid
with two cogeneration plants that saves 25,000 MT of CO2 greenhouse gases
(equal to the annual emissions of 5,100 cars) from being emitted annually.
Hudson Yards is a model for stormwater reuse with rainfall collected from
rooftops and public spaces and stored in a 60,000-gallon tank in the platform
that forms the base of the neighbourhood. Stormwater is used to irrigate the
more than 200 mature trees and 28,000 plants in the public park as well as in
mechanical systems to conserve potable drinking water, reducing stress on New
York’s sewer system.
Social Initiatives
The Board and Investment Manager believe engaged human capital management is
essential for an asset manager, as trained employees increasingly drive value
in the data-driven economy. The Investment Manager takes a long-term view of
employee evolution and invests in its people. It is also committed to
innovating and evolving to meet future employee needs, particularly in areas
where talent is scarce, such as in data science and AI. Third Point is an
Equal Opportunity Employer and has adopted fair chance hiring practices. The
Investment Manager is committed to the benefits of a diverse workforce in
perspective and background. Third Point offers internships to candidates
through SEO, an organization that introduces historically under-represented
students to financial services. It also participates in industry initiatives
to bring more women into asset management via involvement with Girls Who
Invest. The organization’s goal is to have 30% of the world’s investable
capital managed by women by 2030.
• Philanthropy: Through the “Third Point Gives” prorgramme, the
Investment Manager offers its employees multiple opportunities to come
together for service learning and to contribute financially to the community.
Consistent with Third Point values, Third Point Gives comprises three core
elements:
• The Matching Gifts Programme seeks to encourage charitable giving
by Third Point employees with matching eligible contributions up to $15,000
per employee per calendar year.
• The Individual Philanthropy Programme seeks to empower Third
Point employees to maximize their impact on the issues they care about most by
providing opportunities to learn valuable techniques, strategies and
approaches to effective philanthropy.
• The Team Philanthropy Programme seeks to unlock the power of
teamwork and collaboration among Third Point employees to improve the world
around them through joint effort on a shared philanthropic endeavour.
In 2020, Third Point launched an innovative Team Philanthropy project in
partnership with a non-profit organization, the Ladies of Hope Ministries
(“LOHM”), an organization dedicated to helping previously incarcerated
women and their families re-integrate into society. Third Point is not only
donating personal philanthropic capital from the CEO and many employees but is
also offering intellectual expertise in areas such as marketing, accounting,
investing and legal services to help the organization scale more effectively.
• Donor Advised Funds: In 2017, Third Point began to offer its
employees a Donor Advised Fund (“DAF”) structure. A DAF allows an employee
to set aside philanthropic capital in a structure that invests the charitable
funds in Third Point’s hedge funds until the employee is prepared to
allocate them to a non-profit. This allows employees to make annual
contributions to a charitable foundation of their own, to have those funds
grow over time, and to develop a philosophy around giving back.
Governance Initiatives
The Investment Manager strongly encourages good governance practice at all its
investee businesses through formal and informal engagement. Each of Third
Point’s fund structures has an independent Board or Unaffiliated
Consultation Committee. Five of the six members of the Board of the Company
are independent of the Investment Manager.
Going Concern
The Master Fund Shares are liquid and can be converted to cash to meet
liabilities as they fall due. Although these shares are subject to a 25%
quarterly investor level redemption gate, the Board considers this to be
sufficient for normal requirements. After due consideration of the period to
30 June 2023, and having made due enquiry, given the nature of the Company and
its investments, the Directors are satisfied that it is appropriate to
continue to adopt the going concern basis in preparing these Audited Financial
Statements.
Signed on behalf of the Board by:
Rupert Dorey
Chairman
Huw Evans
Director
25 April 2022
Directors’ Report
Directors
The Directors of the Company during the year and to the date of this report
are as listed on this Annual Report.
Directors’ Interests
Mr. Targoff holds the position of Chief Operating Officer, Partner and General
Counsel of Third Point LLC.
Pursuant to an instrument of indemnity entered into between the Company and
each Director, the Company has undertaken, subject to certain limitations, to
indemnify each Director out of the assets and profits of the Company against
all costs, charges, losses, damages, expenses and liabilities arising out of
any claims made against them in connection with the performance of their
duties as a Director of the Company.
Rupert Dorey and his wife Rosemary Dorey held 25,000 shares between them as at
31 December 2021.
Claire Whittet and her husband Martin Whittet, held 2,500 shares as at 31
December 2021 through their joint Retirement Annuity Trust Scheme (RATS).
Huw Evans held 5,000 shares as at 31 December 2021.
Corporate Governance
The Board is guided by the principles and recommendations of the Association
of Investment Companies Code of Corporate Governance (“AIC Code”). The AIC
Code addresses all the principles set out in the UK Corporate Governance Code
(the “UK Code”), as well as setting out additional principles and
recommendations on issues that are of specific relevance to investment
companies. The UK Financial Reporting Council (“FRC”) has confirmed that
investment companies which comply with the AIC Code will be treated as meeting
their obligations under the UK Code and Section 9.8.10R(2) of the Listing
Rules. The Board is reporting under the 2019 AIC Code for the current year.
The Board has determined that reporting in accordance with the principles and
recommendations of the AIC Code will provide appropriate information to
Shareholders. The Company has complied with all the recommendations of the AIC
Code and the relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
• the role of the chief executive;
• executive Directors’ remuneration; and
• the need for an internal audit function.
The Board considers these provisions are not relevant to the position of the
Company, being an externally advised investment company with no executive
directors or employees. The Company has therefore not reported further in
respect of these provisions.
The Company does not have employees, hence no whistle-blowing policy is
necessary. However, the Board, through the Management Engagement Committee
(“MEC”), has satisfied itself that the Company’s service providers have
appropriate whistleblowing policies and procedures and confirmation has been
sought from the service providers that nothing has arisen under those policies
and procedures which should be brought to the attention of the Board.
Furthermore, the MEC, on an annual basis, ensures that service providers have
appropriate anti money laundering, disaster recovery and risk monitoring
policies in place.
The Code of Corporate Governance (the “Guernsey Code”) provides a
framework that applies to all entities licensed by the Guernsey Financial
Services Commission (“GFSC”) or which are registered or authorised as a
collective investment scheme. Companies reporting against the UK Code or the
AIC Code are deemed to comply with the Guernsey Code.
The Board confirms that, throughout the year covered in the Audited Financial
Statements, the Company complied with the Guernsey Code, to the extent it was
applicable based upon its legal and operating structure and its nature, scale
and complexity.
The UK code is available on the FRC website www.frc.org.uk and the AIC code on
the AIC website www.theaic.co.uk.
Board Structure
The Directors who served during the year and the two Directors who were
appointed after the year end are listed below. Mr Bates resigned from the
Board on 22 December 2021. Ms. Whittet is the Senior Independent Director.
Name Position Independent Date Appointed
Steve Bates Non-Executive Director Yes 5 February 2019
Richard Boléat Non-Executive Director Yes 1 March 2022
Rupert Dorey Non-Executive Chairman Yes 5 February 2019
Huw Evans Non-Executive Director Yes 21 August 2019
Vivien Gould Non-Executive Director Yes 1 March 2022
Joshua L Targoff Non-Executive Director No 29 May 2009
Claire Whittet Non-Executive Director Yes 27 April 2017
Mr. Targoff, the Chief Operating Officer, General Counsel and Partner of the
Investment Manager, is not considered independent of the Company’s
Investment Manager. All other Directors are considered by the Board to be
independent.
The Board meets at least four times a year and in addition there is regular
contact between the Board, the Investment Manager and Northern Trust
International Fund Administration Services (Guernsey) Limited (the
“Administrator” and “Corporate Secretary”). The Board requires to be
supplied in a timely manner with information by the Investment Manager, the
Administrator, and the Corporate Secretary and other advisors in a form and of
a quality appropriate to enable it to discharge its duties. The Board,
excluding Mr. Targoff, regularly reviews the performance of the Investment
Manager and the Master Fund to ensure that performance is satisfactory and in
accordance with the terms and conditions of the relative appointments and
Prospectus. It carries out this review through consideration of a number of
objective and subjective criteria and through a review of the terms and
conditions of the advisors’ appointment with the aim of evaluating
performance, identifying any weaknesses and ensuring value for money for the
Company’s Shareholders.
The Company has no executive Directors or employees. All matters, including
strategy, investment and dividend policies, gearing and corporate governance
procedures are reserved for approval by the Board of Directors. The Board
receives full information on the Company’s investment performance, assets,
liabilities and other relevant information in advance of Board meetings.
Board Tenure and Succession Planning
As required by the AIC Code, every Director is subject to annual re-election
by the Shareholders. Any directors appointed to the Board since the previous
AGM also retire and stand for election. The Independent Directors take the
lead in any discussions relating to the appointment or re-appointment of
directors, initially through the Nomination and Remuneration Committee and,
when recruiting new directors, may use an independent recruitment firm.
New Directors receive an induction from the Investment Manager on joining the
Board, and all Directors undertake relevant training as necessary.
Following the “Women on Boards” review conducted by Lord Davies of
Abersoch in February 2011, the Board has examined Lord Davies recommendations
and noted that it is consistently reviewing its policy, and appointments to
the Board will continue to be based on the individual’s skills and
experience regardless of gender.
Directors’ Biographies
Rupert Dorey
Mr. Dorey is a Guernsey resident and has over 35 years of experience in
financial markets. Mr. Dorey was at CSFB for 17 years from 1988 to 2005 where
he specialised in credit related products, including derivative instruments
where his expertise was principally in the areas of debt distribution,
origination and trading, covering all types of debt from investment grade to
high yield and distressed debt. He held a number of positions at CSFB,
including establishing CSFB’s high yield debt distribution business in
Europe, fixed income credit product coordinator for European offices and head
of UK Credit and Rates Sales. Since 2005 he has been acting in a Non-Executive
Directorship capacity for a number of Hedge Funds, Private Equity &
Infrastructure Funds, for both listed and unlisted vehicles. He is former
President of the Guernsey Chamber of Commerce and is a member of the Institute
of Directors. Rupert has extensive experience as both Director and Chairman of
exchange listed and unlisted funds, chairing nine of the funds, seven of which
have been listed and 2 of which were FTSE 250 companies. He has served on
boards with 18 different managers, including Apollo, Aviva, M&G, Partners
Group, Cinven, CQS, Neuberger Berman and Harbourvest.
Richard Boléat
Richard Boléat is a Jersey resident and is a Fellow of the Institute of
Chartered Accountants in England & Wales, having trained with Coopers &
Lybrand in Jersey and the United Kingdom. Richard led Capita Group plc’s
financial services client practice in Jersey until September 2007, when he
left to establish Governance Partners, L.P., an independent corporate
governance practice. He currently acts as chairman of CVC Credit Partners
European Opportunities Limited and SME Credit Realisation Fund Limited, and
audit committee chairman of M&G Credit Income Investment Trust plc, all of
which are listed on the London Stock Exchange, along with a number of other
substantial collective investment and investment management entities
established in Jersey, the Cayman Islands and Luxembourg. He is regulated in
his personal capacity by the Jersey Financial Services Commission.
Huw Evans
Huw Evans is Guernsey resident and qualified as a Chartered Accountant with
KPMG (then Peat Marwick Mitchell) in 1983. He subsequently worked for three
years in the Corporate Finance department of Schroders before joining Phoenix
Securities Limited in 1986. Over the next twelve years he advised a wide range
of companies in financial services and other sectors on mergers and
acquisitions and more general corporate strategy. Since moving to Guernsey in
2005, he has acted as a professional non-executive Director of a number of
Guernsey-based companies and funds. He holds an MA in Biochemistry from
Cambridge University.
Vivien Gould
Vivien Gould is the Senior Independent Director at The Lindsell Train
Investment Trust PLC and a non-executive director of Baring Emerging EMEA
Opportunities PLC, Schroder AsiaPacific Fund plc and National Philanthropic
Trust UK. She has worked in the financial services sector since 1981. She was
a founder director of River & Mercantile Investment Management Limited (1985)
and served as a senior executive and Deputy Managing Director with the Group
until 1994. She then worked as an independent consultant and served on the
boards of a number of investment management companies, listed investment
trusts, other financial companies and charitable trusts.
Joshua L. Targoff
Joshua L. Targoff has been the Chief Operating Officer of the Investment
Manager since May 2009. He joined as General Counsel in May 2008. Previously,
Mr. Targoff was the General Counsel of the Investment Banking Division of
Jefferies & Co. Mr. Targoff spent seven years doing M & A transactional work
at Debevoise & Plimpton LLP. Mr. Targoff graduated with a J.D. from Yale Law
School, and holds a B.A. from Brown University. In 2012, Mr. Targoff was made
a Partner of the Investment Manager.
Claire Whittet
Claire Whittet is a Guernsey resident and has over 40 years’ experience in
the banking industry. After gaining an MA in Geography from Edinburgh
University, she joined the Bank of Scotland until moving to Guernsey in 1996.
In the intervening period she was involved in a wide variety of credit
transactions including commercial and corporate finance. She joined Bank of
Bermuda in Guernsey becoming Global Head of Private Client Credit and moved to
Rothschild & Co Bank International Ltd as Director of Lending in 2003 and was
latterly Co-Head and Managing Director until 2016 when she became a
Non-Executive Director. She is a Non-Executive Director of a number of listed
and unlisted funds, is a Chartered Banker and a Member of the Chartered
Institute of Bankers in Scotland, the Insurance Institute and holds the
Institute of Directors Diploma in Company Direction.
A number of the directors are also Non-Executive Directors of other listed
funds. The Board notes that none of these funds are trading companies and
confirms that all Non-Executive Directors of the Company have sufficient time
and commitment, as evidenced by their attendance and participation at
meetings, to devote to this Company.
Meeting Attendance Records
The table below lists Directors’ attendance at meetings during the year.
Name Scheduled Board Meetings Attended (max 4) Audit Committee Meetings Attended (max 3)
Steve Bates (1) 4 of 4 N/A
Rupert Dorey 4 of 4 3 of 3
Huw Evans 4 of 4 3 of 3
Joshua L Targoff (2) 4 of 4 N/A
Claire Whittet 4 of 4 3 of 3
(1) Mr. Bates resigned from the Board with effect 22 December 2021. Mr. Bates
was not a member of the Audit Committee.
(2) Mr. Targoff does not attend Meetings as a Director where recommendations
from the Investment Manager are under consideration. Mr. Targoff is not a
member of the Audit Committee.
Committees of the Board
The AIC Code requires the Company to appoint Nomination, Remuneration and
Management Engagement Committees and the independent directors of the Board
act as these committees. The Nomination and Remuneration Committee considers
the composition of and recruitment to the Board, taking into account market
practice, peer group statistics and the requirements of the role when
determining remuneration levels of the Directors.
The function of the Management Engagement Committee is to ensure that the
Company’s management agreement is competitive and reasonable for the
Shareholders, along with the Company’s agreements with all other third party
service providers (other than the external auditors). This Committee also
reviews annually the performance of the Investment Manager with a view to
determining whether to recommend to the Board that the Investment Manager’s
mandate be renewed, subject to the specific notice period requirement of the
agreement. The other third party service providers are also reviewed on an
annual basis.
The Investment Manager has wide experience in managing and administering fund
vehicles and has access to extensive investment management resources. The
Board considers that the continued appointment of the Investment Manager on
the terms agreed would be in the interests of the Company’s Shareholders as
a whole.
Audit Committee
The Company’s Audit Committee conducts formal meetings at least three times
a year. Its functions include monitoring the Company’s internal control and
risk management systems, oversight of the relationship with the External
Auditor, including consideration of the appointment, independence,
effectiveness of the audit, and remuneration of the auditors, and to review
and recommend the Annual Report and Audited Financial Statements to the Board
of Directors.
Directors’ Duties and Responsibilities
The Directors have adopted a set of Reserved Powers, which establish the key
purpose of the Board and detail its major duties. These duties cover the
following areas of responsibility:
• Statutory obligations and public disclosure;
• Strategic matters and financial reporting;
• Board composition and accountability to Shareholders;
• Risk assessment and management, including reporting, compliance,
monitoring, governance and control; and
• Other matters having material effects on the Company.
These Reserved Powers of the Board allow the Directors to discharge their
fiduciary responsibilities and provide a set of parameters for measuring and
monitoring the effectiveness of their actions.
The Directors are responsible for the overall management and direction of the
affairs of the Company. The Company has no Executive Directors or employees.
The Company invests all of its assets in shares of the Master Fund and Third
Point LLC acts as Investment Manager to the Master Fund and is responsible for
the discretionary investment management of the Master Fund’s investment
portfolio under the terms of the Master Fund Prospectus.
Northern Trust International Fund Administration Services (Guernsey) Limited
(“NT”) acts as Administrator and Company Secretary and is responsible to
the Board under the terms of the Administration Agreement. The Administrator
is also responsible to the Board for ensuring compliance with the Rules and
Regulations of The Companies (Guernsey) Law, London Stock Exchange listing
requirements and observation of the Reserved Powers of the Board and in this
respect the Board receives detailed quarterly reports.
The Directors have access to the advice and services of the Company Secretary
who is responsible to the Board for ensuring that Board procedures are
followed and that it complies with applicable rules and regulations of The
Companies (Guernsey) Law, the GFSC and the London Stock Exchange. Individual
Directors may, at the expense of the Company, seek independent professional
advice on any matter that concerns them in the furtherance of their duties.
The Company maintains appropriate Directors’ and Officers’ liability
insurance in respect of legal action against its Directors on an ongoing basis
and the Company has maintained appropriate Directors’ Liability Insurance
cover throughout the year.
The Board is also responsible for safeguarding the assets of the Company and
for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
Internal Control and Financial Reporting
The Directors acknowledge that they are responsible for establishing and
maintaining the Company’s system of internal control and reviewing its
effectiveness. Internal control systems are designed to manage rather than
eliminate the failure to achieve business objectives and can only provide
reasonable but not absolute assurance against material misstatements or loss.
The Directors review all controls including operations, compliance and risk
management. The key procedures which have been established to provide internal
control are:
• Investment advisory services are provided by the
Investment Manager. The Board is responsible for setting the overall
investment policy, ensuring compliance with the Company’s Investment
Strategy and monitoring the action of the Investment Manager and Master Fund
at regular Board meetings. The Board has also delegated administration and
company secretarial services to NT; however, it retains accountability for all
functions it has delegated.
• The Board considers the process for identifying,
evaluating and managing any significant risks faced by the Company on an
on-going basis. It ensures that effective controls are in place to mitigate
these risks and that a satisfactory compliance regime exists to ensure all
local and international laws and regulations are upheld.
• The Board clearly defines the duties and
responsibilities of its agents and advisors and appointments are made by the
Board after due and careful consideration. The Board monitors the ongoing
performance of such agents and advisors.
• The Investment Manager and NT maintain their own
systems of internal control, on which they report to the Board. The Company,
in common with other investment companies, does not have an internal audit
function. The Audit Committee has considered the need for an internal audit
function, but because of the internal control systems in place at the
Investment Manager and NT, has decided it appropriate to place reliance on
their systems and internal control procedures.
• The systems are designed to ensure effectiveness
and efficient operation, internal control and compliance with laws and
regulations. In establishing the systems of internal control, regard is paid
to the materiality of relevant risks.
Board Performance
The Board and Committees undertake formal annual evaluations of their own
performance and that of the individual Directors. This process is conducted by
the respective Chairman reviewing individually with each of the Directors and
members of the Committee their performance, contribution and commitment to the
Company. In line with provision 6.2.14 of the AIC Code, the performance of the
Chairman is evaluated annually by the other independent Directors. An external
evaluation of the Board’s performance was carried out by Lintstock Limited
in February 2021. Linstock did not raise any issues of significance.
Management of Principal Risks and Uncertainties
In considering the risks and uncertainties facing the Company, the Audit
Committee reviews regularly a matrix which documents the principal and
emerging risks and reports its findings to the Board.
This discipline is in accordance with the Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting, published by
the FRC and has been in place for the year under review and up to the date of
approval of the Audited Financial Statements.
The risk matrix document considers the following information:
• Reviewing the risks faced by the Company and the
controls in place to address those risks;
• Identifying and reporting changes in the risk
environment;
• Identifying and reporting changes in the
operational controls; and
• Identifying and reporting on the effectiveness of
controls and remediation of errors arising.
The Directors are responsible for establishing and maintaining the Company’s
system of internal control and reviewing its effectiveness by focusing on four
key areas:
• Consideration of the investment advisory services
provided by the Investment Manager;
• Consideration of the process for identifying,
evaluating and managing any significant current and emerging risks faced by
the Company on an ongoing basis;
• Clarity around the duties and responsibilities of
the agents and advisors engaged by the Directors; and
• Reliance on the Investment Manager and
Administrator maintaining their own systems of internal controls.
Further discussion on Internal Control is documented under “Internal Control
and Financial Reporting” set out above.
The risk matrix considers all the significant risks to which the Company has
been exposed during the financial year and, from these, the Directors paid
particular attention to the following principal risks and uncertainties:
• Discount to the NAV. The Board monitors the
discount to the NAV and maintains regular contact with the Investment Manager.
In addition, the Investment Manager, Corporate Broker and, when considered
necessary, the Directors maintain regular contact with the significant
Shareholders in the Company. The Board made updates in September 2019 to the
Company’s share repurchase programme whereby a programme was put in place to
buy back up to €200 million worth of its stock over a three-year period with
the intention of narrowing the discount. On April 1 2021, the Board announced
further measures relating to the discount control which are currently being
implemented;
• Concentration of the Investor Base. The Directors
receive quarterly investor reports from the Corporate Broker and there is
regular communication between the Directors and the Corporate Broker to
identify any significant changes in the Shareholder base. During the year a
minority of Shareholders petitioned the Board in an attempt to get the Board
to follow policies which were in those Shareholders’ interests. The Board
engaged with those shareholders but continued to follow policies which it
considered to be in the best interests of Shareholders taken as a whole;
• Shareholder relations. The Board monitors key
shareholder reports provided by the Corporate Broker at each Board Meeting.
The Investment Manager prepares monthly updates on behalf of the Master Fund
and maintains the Company website. The Board receives quarterly reports from
the Corporate Broker and the Investment Manager on the major shareholdings.
The Board and the Investment Manager’s investment relations personnel have
maintained a policy of active engagement with Shareholders over the year,
particularly in the light of the actions taken by a minority as referred to
above;
• Underlying investment performance of the Master
Fund. The Master Fund is exposed to investment risks which in turn are
influenced by local and global events. To mitigate this risk, the Directors
receive regular updates from the Investment Manager on the performance of the
Master Fund. The Board reviews quarterly performance updates on the Master
Fund and has access to the Investment Manager on any potential question
raised;
• Liquidity of shares in the Master Fund. The
Company relies on the redemption of shares in the Master Fund in order to meet
its monthly expenses and share buybacks. The Directors receive reports from
the Administrator each month as this takes place;
• Valuation of investments. The valuation of the
Company's investment in the Master Fund is confirmed by the Administrator of
the Master Fund, is checked by the Investment Manager and is reviewed as part
of the Company's annual audit. The Board makes enquiries of the Investment
Manager to satisfy itself that there are satisfactory controls in place over
the valuation processes within the Master Fund and the Master Partnership. The
accounts of the Master Fund and the Master Partnership are both subject to
annual audit; and
• Performance of the Investment Manager. Through
the Management Engagement Committee, the Directors review the performance of
the Investment Manager on an annual basis. Dan Loeb is CEO and CIO of the
Investment Manager and is a critical element of its success. Prior to the
imposition of COVID-19 travel restrictions, Board representatives conducted
annual visits to the Investment Manager in New York, the last being in March
2020. The Board resumed this practice with a visit in April 2022.
It is expected that the principal risks and uncertainties listed above will
apply to the Company for a minimum of the next six months.
COVID-19 assessment
COVID-19 has had a significant impact on many businesses. The Directors
believe the risk associated with the impact of COVID-19 on the Company has
been mitigated in the following ways:
• Business Operations — the Board has inquired,
and is satisfied, that the Company’s service providers have had robust
processes in place in order to continue to provide the required level of
services to the Company, and to maintain compliance with laws and regulations,
in the face of the challenges arising as a result of COVID-19. There have been
no operational difficulties encountered or disruption in services to date.
• Liquidity Risk — the Company’s main source of
cash is via redemptions from the Master Fund. As of 31 December 2021, 59% of
the Master Partnership’s gross assets were invested in liquid securities
(defined as Level 1 positions) and cash and so it is well positioned to pay
redemptions as needed. The governing documents of the Master Fund allow for a
gate to permit only 20% of the Master Fund’s Net Asset Value to be redeemed
at each quarterly redemption date on a pro rata basis. To date, the Master
Fund has not seen any significant redemptions which would cause the Directors
of the Company concern regarding gating.
Significant Events
On 1 April 2021, the Directors announced several changes aimed at enhancing
the strength of the Company following a detailed strategic review in close
partnership with the Investment Manager. These are described in the
Chairman’s statement and will be implemented over the next six years.
On 1 September, the Company exchanged its holdings in Class E Shares and Class
N Shares of the Master Fund for an equivalent holding in Class Y Shares.
On 1 September, it was announced that a credit facility of $150 million had
been agreed with the intention of deploying this capital over the following
quarter.
At an EGM held on 1 December, Shareholders approved an exchange mechanism
under which eligible shareholders would be able to exchange their shares in
the Company for up to an aggregate of $75 million of shares in the Master Fund
at a 2% discount to NAV.
In the second half of the year, the Board received two separate requests from
the same group of shareholders representing 10% of the voting rights to hold a
general meeting at which a vote would be held to allow short term liquidity at
close to NAV. The Board sought legal advice on these requests and as a result
declined to hold the votes on the grounds that, if passed, they would be
ineffective in directing board decisions. These shareholders then
requisitioned a vote to remove Josh Targoff as a Director of the Company. This
was put to all Shareholders at the EGM on 1 December and the resolution was
not passed.
Mr. Steve Bates resigned from the Board with effect 22 December 2021.
A further requisition was made by some shareholders following the year end
which was withdrawn following the announcement of Board changes made on 1
March 2022. Further details are set out in the Chairman’s Statement and in
the subsequent events note to the Audited Financial Statements.
In the year to 31 December 2021, 3.1 million shares were repurchased with a
value of approximately $79 million, at a weighted average discount to net
asset value of 16.5%. This had the effect of accreting 46 cents per share to
NAV.
Relations with Shareholders
The Board welcomes Shareholders’ views and places great importance on
communication with its Shareholders. The Board receives regular reports on the
views of Shareholders and the Chairman and other Directors are available to
meet Shareholders. Shareholders who wish to communicate with the Board should
in the first instance contact the Administrator, whose contact details can be
found on the Company’s website (www.thirdpointlimited.com). The Annual
General Meeting of the Company provides a forum for Shareholders to meet and
discuss issues with the Directors of the Company. The fourteenth Annual
General Meeting was held on 8 July 2021 with all proposed resolutions being
passed by the Shareholders.
As described above, over the past twelve months the Company was served with a
total of four requisitions for EGMs by a consortium of four shareholders, none
of which was ultimately successful. The Board engaged with the requisitionists
and, in February 2022, both the Company and the requisitionists came to a
mutually agreed position to strengthen the Board, further endorsing its
independence and capability.
International Tax Reporting
For the purposes of the US Foreign Account Tax Compliance Act (“FATCA”),
the Company is registered with the US Internal Revenue Services (“IRS”) as
a Guernsey reporting Foreign Financial Institution (“FFI”). The Company
has received a Global Intermediary Identification Number and can be found on
the IRS FFI list.
The Common Reporting Standard (“CRS”) is a global standard for the
automatic exchange of financial account information developed by the
Organisation for Economic Co-operation and Development (“OECD”), which has
been adopted by Guernsey and which came into effect on 1 January 2016.
The Board has taken the necessary action to ensure that the Company is
compliant with Guernsey regulations and guidance in this regard.
Criminal Finances Act 2017
In respect of the UK Criminal Finances Act 2017 which introduced a new
corporate criminal offence (“CCO”) of ‘failing to take reasonable steps
to prevent the facilitation of tax evasion’, the Board confirms that it is
committed to zero tolerance towards the criminal facilitation of tax evasion.
The Board also keeps under review developments involving other social,
environmental and regulatory matters and will report on those to the extent
they are considered relevant to the Company’s operations.
Significant Shareholdings
As at 8 April 2022, the Company had been notified that the following investors
had significant shareholdings in excess of 5% in the Company:
Total Shares Held % Holdings in Class
Significant Shareholders
Goldman Sachs Securities (Nominees) Limited 5,566,714 17.28%
AVI Global Trust plc 3,412,359 10.59%
Vidacos Nominees Limited 2,427,370 7.53%
BBHISL Nominees Limited 1,843,115 5.72%
Smith & Williamson Nominees Limited 1,803,888 5.60%
Following the exchange facility in March 2022, the total shares held above may
be subject to change.
The Directors confirm to the best of their knowledge:-
• there is no relevant audit information of which
the Company’s Auditor is unaware of, and each Director has taken steps
he/she ought to have taken as a Director to make himself/herself aware of any
relevant information and to establish that the Company’s Auditor is aware of
that Information;
• this Annual Report and Audited Financial
Statements have been prepared in accordance with accounting principles
generally accepted in the United States of America and give a true and fair
view of the financial position of the Company;
• this Annual Report and Audited Financial
Statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for the Shareholders to assess the
Company’s performance, business model and strategy; and
• this Annual Report and Audited Financial
Statements include information detailed in the Directors’ Report, the
Investment Manager’s Review and Notes to the Audited Financial Statements,
which provide a fair review of the information required by:-
1. DTR 4.1.8 of the Disclosure Guidance and Transparency Rules (“DTR”),
being a fair review of the Company business and a description of the principal
risks and uncertainties facing the Company; and
2. DTR 4.1.11 of the DTR, being an indication of important events that have
occurred since the ending of the financial year and the likely future
development of the Company.
Signed on behalf of the Board by:
Rupert Dorey
Chairman
Huw Evans
Director
25 April 2022
Disclosure of Directorships in Public Listed Companies
The following summarises the Directors’ directorships in public companies:
Company Name Exchange
Richard Boléat CVC Credit Partners European Opportunities Limited SME Credit Realisation Fund Limited M&G Credit Income Investment Trust plc London London London
Rupert Dorey NB Global Monthly Income Fund Limited London
Huw Evans Standard Life Investments Property Income Trust Limited VinaCapital Vietnam Opportunity Fund Limited London London
Vivien Gould The Lindsell Train Investment Trust PLC Baring Emerging EMEA Opportunities PLC Schroder AsiaPacific Fund plc National Philanthropic Trust UK London London London London
Claire Whittet BH Macro Limited Eurocastle Investment Limited International Public Partners Limited Riverstone Energy Limited TwentyFour Select Monthly Income Fund Limited London Euronext London London London
Joshua L Targoff SiriusPoint Limited New York
Statement of Directors’ Responsibilities in Respect of the Audited Financial
Statements
The Directors are responsible for preparing the Audited Financial Statements
in accordance with applicable Guernsey Law and accounting principles generally
accepted in the United States of America. Guernsey Company Law requires the
Directors to prepare financial statements for each financial period which give
a true and fair view of the state of affairs of the Company and of the net
income or expense of the Company for that year.
In preparing these Audited Financial Statements the Directors should:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are reasonable
and prudent;
• state whether the applicable accounting standards
have been followed subject to any material departures disclosed and explained
in the Audited Financial Statements; and
• prepare the Audited Financial Statements on a
going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the Audited Financial Statements
comply with The Companies (Guernsey) Law, 2008. They are also responsible for
the system of internal controls, safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors have responsibility to confirm that:
• there is no relevant audit information of which
the Company’s Auditor is unaware and each Director has taken all the steps
he/she ought to have taken as a Director to make himself aware of any relevant
information and to establish that the Company’s Auditor is aware of that
information;
• this Annual Report and Audited Financial
Statements have been prepared in accordance with accounting principles
generally accepted in the United States of America and give a true and fair
view of the financial position of the Company;
• this Annual Report and Audited Financial
Statements, taken as a whole, are fair, balanced and understandable and
provide information necessary for the Shareholders to assess the Company’s
performance, business model and strategy; and
• this Annual Report and Audited Financial
Statements include information detailed in the Directors’ Report, the
Investment Manager’s Review and Notes to the Audited Financial Statements,
which provide a fair review of the information required by:
1. DTR 4.1.8 of the Disclosure Guidance and Transparency Rules (“DTR”),
being a fair review of the Company business and a description of the principal
risks and uncertainties facing the Company; and
2. DTR 4.1.11 of the DTR, being an indication of important events that have
occurred since the ending of the financial year and the likely future
development of the Company.
Rupert Dorey
Chairman
Huw Evans
Director
25 April 2022
Directors’ Remuneration Report
Introduction
The Board has prepared this report as part of its framework for corporate
governance which, as described in the Directors’ Report, enables the Company
to comply with the main requirements of the UK Corporate Governance Code
published by the Financial Reporting Council.
An ordinary resolution for the approval of this report will be put to the
Shareholders at the forthcoming AGM.
Remuneration Policy
The Board has appointed a Nomination and Remuneration Committee and the
independent directors act as this committee. This Committee considers the
composition of and recruitment to the Board, taking into account market
practice, peer group statistics and the requirements of the role when
determining remuneration levels of the Directors. Mr. Rupert Dorey was
appointed Chairman of the Board with effect from 18 February 2022. Effective
from Mr. Dorey’s appointment as Chairman of the Board, he stood down from
the Chair of the Nomination and Remuneration Committee, a role which is now
held by Ms. Claire Whittet.
The Company’s policy is that the fees payable to the Directors should
reflect the time spent by the Directors on the Company’s affairs and the
responsibilities borne by the Directors and be sufficient to attract, retain
and motivate directors of a quality required to run the Company successfully.
The Chairman of the Board is paid a higher fee in recognition of his
additional responsibilities, as is the Chairman of the Audit Committee. The
policy is to review fee rates periodically, although such a review will not
necessarily result in any changes to the rates, and account is taken of fees
paid to directors of comparable companies.
There are no long term incentive schemes provided by the Company and no
performance fees are paid to Directors.
No Director has a service contract with the Company but each of the Directors
is appointed by a letter of appointment which sets out the main terms of their
appointment. Director appointments can also be terminated in accordance with
the Articles. Should Shareholders vote against a Director standing for
re-election, the Director affected will not be entitled to any compensation.
Directors are remunerated in the form of fees, payable quarterly in arrears,
to the Director personally. No other remuneration or compensation was paid or
payable by the Company during the year to any of the Directors apart from the
reimbursement of allowable expenses.
At the AGM on 1 July 2020, shareholders approved an overall fee cap of
£500,000 for the Directors as a whole.
The fees for 2021 were as follows; Board Chairman—£68,000 per annum, Audit
Chairman—£50,000 per annum and Director—£40,000 per annum. After a
benchmarking exercise conducted during the year, the Nomination and
Remuneration Committee recommended to the Board that, from 1 January 2022, the
fees be increased to: Board Chairman—£76,000 per annum, Audit
Chairman—£57,000 per annum and Director—£48,000 per annum. Josh Targoff
has waived his fees. The Nomination and Remuneration and Management Engagement
Committee Chairs receive an additional £3,000 per annum.
Directors’ fees
The fees payable by the Company in respect of each of the Directors who served
during 2021 and 2020, were as follows:
Name 2020 £ 2020 £
Steve Bates (1) 66,323 68,000
Rupert Dorey (Chairman) 43,616 41,500
Huw Evans (Audit Committee Chairman) 50,000 45,000
Christopher Legge (2) – 25,000
Joshua L Targoff (5) – –
Claire Whittet 43,074 41,500
Total 203,013 221,000
USD equivalent US$280,566 US$284,125
(1) Mr. Bates resigned from the Board with effect 22 December 2021.
(2) Mr. Legge retired at the AGM on 1 July 2020.
(3) As a non-independent Director and as a Partner of the Investment Manager
Joshua L Targoff waived his Directors’ fee.
Performance table
The table shown details the share price returns over the year. Signed on
behalf of the Board by:
Rupert Dorey
Chairman
Huw Evans
Director
25 April 2022
Report of the Audit Committee
We present the Audit Committee (the “Audit Committee”) Report for the year
ended 31 December 2021, setting out the Audit Committee’s structure and
composition, principal duties and key activities during the year. As in
previous years, the Audit Committee has reviewed the Company’s financial
reporting, the independence and effectiveness of the independent auditor, and
the internal control and risk management systems of service providers.
The Board is satisfied that for the year under review and thereafter the Audit
Committee has recent and relevant commercial and financial knowledge.
Structure and Composition
The Audit Committee is chaired by Huw Evans, and during the year, its other
members were Claire Whittet and Rupert Dorey. The Audit Committee operates
within clearly defined terms of reference.
The Audit Committee Terms of Reference provide that appointments to the Audit
Committee shall be for a period of up to three years, which may be extended
for two further three year periods, and thereafter annually, provided that the
Director whose appointment is being considered remains an Independent Director
for the period of extension.
It was announced on 18 February 2022 that Rupert Dorey had been appointed
Chairman of the Company following the resignation of Steve Bates. He therefore
stood down from his membership of the Audit Committee. Richard Boléat and
Vivien Gould became members of the Audit Committee on 1 March 2022 when they
were appointed to the Board.
The tenure of the current members of the Audit Committee is set out below.
Name of Audit Committee Member Date of Appointment to Audit Committee Next Date for Review
Richard Boléat 1 March 2022 March 2025
Huw Evans 28 August 2019 August 2022
Vivien Gould 1 March 2022 March 2025
Claire Whittet 27 April 2017 April 2023
The Audit Committee conducts formal meetings at least three times a year. The
table sets out the number of Audit Committee meetings held during the year
ended 31 December 2021 and the number of such meetings attended by each
committee member. The Independent Auditor is invited to attend those meetings
at which the annual and interim reports are considered. The Independent
Auditor and the Audit Committee will meet together without representatives of
either the Administrator or Investment Manager being present if either
considers this to be necessary.
Principal Duties
The role of the Audit Committee includes:
• monitoring the integrity of the published
financial statements of the Company;
• keeping under review the consistency and
appropriateness of accounting policies on a year to year basis. Satisfying
itself that the annual accounts, the interim statement of financial results
and any other major financial statements issued by the Company follow
generally accepted accounting principles in the United States of America and
give a true and fair view of the Company and any associated undertakings’
affairs; matters raised by the external auditors about any aspect of the
accounts or of the Company’s control and audit procedures are appropriately
considered and, if necessary, brought to the attention of the Board for
resolution;
• monitoring and reviewing the quality and
effectiveness of the independent auditors and their independence;
• considering and making recommendations to the
Board on the appointment, reappointment, replacement and remuneration of the
Company’s independent auditor;
• monitoring and reviewing the internal control and
risk management systems of the service providers; and
• considering at least once a year whether there is
a need for an internal audit function.
The complete details of the Audit Committee’s formal duties and
responsibilities are set out in the Audit Committee’s terms of reference,
which can be obtained from the Company’s website.
Independent Auditor
The Audit Committee is also the forum through which the independent auditor
(the “auditor”) reports to the Board of Directors. The objectivity of the
auditor is reviewed by the Audit Committee which also reviews the terms under
which the auditor is appointed to perform non-audit services. The Audit
Committee reviews the scope and results of the audit, its cost effectiveness
and the independence and objectivity of the auditor, with particular regard to
non-audit fees. The Audit Committee has established pre-approval policies and
procedures for the engagement of Ernst & Young LLP to provide non-audit
services.
Ernst & Young LLP has been the independent auditor from the date of the
initial listing on the London Stock Exchange.
The audit fees proposed by the auditors each year are reviewed by the Audit
Committee taking into account the Company’s structure, operations and other
requirements during the year and the Audit Committee makes recommendations to
the Board.
Non-audit fees were paid to Ernst & Young LLP during the year in respect of
the interim review of the Company's condensed accounts to 30 June 2021. Ernst
& Young LLP also provided tax compliance services, the fees relating to which
have not been fully paid to date. The Audit Committee considers Ernst & Young
LLP to be independent of the Company.
Evaluations or Assessments Made During the Year
The following sections discuss the assessments made by the Audit Committee
during the year:
Significant Areas of Focus for the Financial Statements
The Audit Committee’s review of the interim and annual financial statements
focused on the valuation of the Company’s investment in the Master Fund.
This represents substantially all the net assets of the Company and as such is
the biggest factor in relation to the accuracy of the Audited Financial
Statements. The holding in the Master Fund has been confirmed with the
Company’s Administrator and the Master Fund. This investment has been valued
in accordance with the Accounting Policies set out in Note 3 to the Audited
Financial Statements. The Audit Committee has reviewed the Financial
Statements of the Master Fund and their Accounting Policies and determined the
fair value of the investment as at 31 December 2021 is reasonable. The
Financial Statements of the Master Fund and the Master Partnership for the
year ended 31 December 2021 were audited by Ernst & Young Ltd in the Cayman
Islands and Ernst & Young LLP in New York both of whom issued unmodified audit
opinions dated 18 March 2022.
Effectiveness of the Audit
The Audit Committee had formal meetings with Ernst & Young LLP during the
course of the year: 1) before the start of the audit to discuss formal
planning, discuss any potential issues and agree the scope that will be
covered and 2) after the audit work was concluded to discuss any significant
matters arising.
The Board considered the effectiveness and independence of Ernst & Young LLP
by using a number of measures, including but not limited to:
• the audit plan presented to them before the start of the audit;
• the audit results report including where appropriate, explanation for any
variations from the original plan;
• changes to audit personnel;
• the auditor’s own internal procedures to identify threats to
independence;
• feedback from both the Investment Manager and the Administrator; and
• confirmation from Ernst & Young LLP on their independence as additional
comfort for the Audit Committee.
Further to the above, at the point of substantial conclusion of the 2021
audit, the Audit Committee performed a specific evaluation of the performance
of the independent auditor. This is supported by the results of questionnaires
completed by the Audit Committee covering areas such as quality of audit team,
business understanding, audit approach and management.
There were no adverse findings from this evaluation.
Under the Crown Dependency rules, ethical standards require the Board to
consider the outsourcing of any non-audit services such as interim review, tax
compliance, tax structuring, private letter rulings, accounting advice,
quarterly reviews and disclosure on an annual basis. Although the review of
the Interim Report and Unaudited Condensed Interim Financial Statements is
deemed to be a non-audit service, the Board considers it most appropriate for
the external auditors to carry out this review. The budget for the annual
audit, the interim review and certain tax compliance work carried out by Ernst
& Young LLP was pre-approved by the Audit Committee.
Audit fees and Safeguards on Non-Audit Services
The tables below summarises the remuneration payable by the Company to Ernst &
Young LLP during the years ended 31 December 2021 and 31 December 2020.
2021 £ 2020 £
Total Total
Audit Services 75,000 55,355
Non-audit Services – interim review and tax compliance services* 54,575 33,100
* Non-audit services includes a £7,000 tax compliance fee that has been
approved but for which the work has not yet been performed.
Audit Tender
It is best practice, as well as a legal requirement for public companies in
the UK, that the audit of the Company is put out to tender at least every 10
years. Consequently, during the year the Audit Committee invited each of the
big four accounting firms (including Ernst & Young LLP as the current auditor)
to participate in a tender. With the exception of Ernst & Young LLP, the other
firms declined to participate on the basis that they would not want to audit a
feeder fund, such as the Company, if they did not also audit the Master Fund.
The Board subsequently wrote to the Board of the Master Fund, which is
domiciled in the Cayman Islands where there are no requirements to rotate
auditors, requesting that if the Board of the Master Fund were to consider
carrying out a tender of its audit, the Company would also like to participate
in the process.
Internal Control
The Audit Committee has examined the need for an internal audit function. The
Audit Committee considered that the systems and procedures employed by the
Investment Manager and the Administrator, including their internal audit
functions, provided sufficient assurance that a sound system of internal
control, which safeguards the Company’s assets, has been maintained. An
internal audit function specific to the Company is therefore considered
unnecessary.
The Audit Committee has requested and received SOC1 or equivalent reports such
as service provider assessment reports from the Company’s Administrator and
Master Fund’s Administrators to enable it to fulfil its duties under its
terms of reference. Representatives of the auditors, Investment Manager and
the Administrator attend the Audit Committee meetings as a matter of practice
and presentations are made by those attendees as and when required.
Conclusion and Recommendation
After reviewing various reports such as the operational and risk management
framework and performance reports from management, liaising where necessary
with Ernst & Young LLP, and assessing the significant areas of focus for
financial statement issues, the Audit Committee is satisfied that these
Audited Financial Statements appropriately address the critical judgements and
key estimates (both in respect to the amounts reported and the disclosures).
The Audit Committee is also satisfied that the significant assumptions used
for determining the value of assets and liabilities have been appropriately
scrutinised, challenged and are sufficiently robust.
The Independent Auditor reported to the Audit Committee that no material
misstatements were found in the course of its work. Furthermore, both the
Investment Manager and the Administrator confirmed to the Audit Committee that
they were not aware of any material misstatements including matters relating
to presentation. The Audit Committee confirms that it is satisfied that the
Independent Auditor has fulfilled its responsibilities with diligence and
professional scepticism.
Consequent to the review process on the effectiveness of the independent audit
and the review of audit services, the Audit Committee has recommended that
Ernst & Young LLP be reappointed for the coming financial year.
Ernst & Young LLP has been the auditor of the Company since its incorporation
in 2007 and the current audit partner is David Moore who has been in the role
for four years. The audit for the year ending 31 December 2022 will be David
Moore’s last year in the role of audit partner for Third Point Investors
Limited.
For any questions on the activities of the Audit Committee not addressed in
the foregoing, a member of the Audit Committee will attend each Annual General
Meeting to respond to such questions.
Huw Evans
Audit Committee Chairman
25 April 2022
Investment Manager’s Review
Performance Summary (1)
USD Class 31 December 2021 31 December 2020 % Return
Share Price $ 27.80 $ 21.20 31.1%
Net asset value per share $ 32.37 $ 26.18 23.6%
Discount (14.1%) (19.0%)
(1) For the period 1 January 2021 to 31 December 202.
Strategy Performance
For the twelve months ended 31 December 2021, Third Point Investors
Limited’s net asset value (“NAV”) per share increased by 23.6%, while
the corresponding share price increased by 31.1%. NAV performance was boosted
by 46 cents per share by way of the Company’s continuing share repurchase
programme, which in 2021 comprised a total of 3.1 million shares with a value
of approximately $79.0 million. The share price return included the effects of
the discount to NAV narrowing from 19.0% to 14.1%.
While not without volatility, 2021 was a year of resilience, with markets
shrugging off political tumult, uneven recovery from COVID-19 waves, and
supply chain bottlenecks to deliver strong headline returns. Third Point
navigated this fitful landscape with the breadth of its multi-asset platform:
with the exception of the short book, each of Third Point’s asset classes
contributed to returns for the year. Long Equity positions contributed 32.1%
to gross returns, Privates 4.2%, Structured Credit 3.6%, Corporate & Sovereign
Credit 2.3%, and Short Equity -10.8%.
In the public and private equity portfolios, the maturing of Third Point
Ventures’ 2015 vintage investments stood out among the top contributors.
AI-driven non-bank lender Upstart and endpoint cybersecurity company
SentinelOne were the top two individual winners, and have also been two of the
most successful positions in Third Point’s 26-year history. Third Point led
expansion stage financing rounds and took a position on the board for both
companies six years prior. As an engaged shareholder, Third Point advised on
go-to-market strategy and talent acquisition, introduced customers, and helped
provide perspective on capital markets. Upstart serves as an example of the
cross-pollination across Third Point teams, as the Venture, Structured Credit,
and Public Equity teams all contributed to sourcing, underwriting, and
advising the Company across its capital structure. Both Upstart (December
2020) and SentinelOne (June 2021) executed successful IPOs, as public markets
began to appreciate the potential Third Point identified earlier in their
respective trajectories.
Third Point’s credit portfolios, meanwhile, produced solid risk-adjusted
returns in spite of a muted year for fixed income. Corporate and Sovereign
Credit returned over 25% on invested capital, contributing 2.3% to gross
returns, while Structured Credit returned more than 17% on invested capital,
contributing 3.6% to gross returns. In Corporate Credit, exposures focused on
energy and reopening themes, both of which performed well as commodity prices
advanced and vaccinations rolled out more broadly. In Structured Credit, Third
Point focused on sourcing pools of loans in Consumer ABS – including student
loans and personal consumer loans – and structuring these loans into
securitizations, taking advantage of the persistent demand for yield and
exposure to resilient consumer verticals.
The Firm continued to invest in talent, hiring eight investment professionals
over the course of 2021. Three of these hires are devoted to Third Point’s
Venture effort, three cover Public Equities as part of Third Point’s sector
specialist teams, and two have augmented the firm’s Structured Credit team.
As of 31 December 2021, the top five single-issuer positions in the portfolio
were SentinelOne Inc., Pacific Gas & Electric Co., Prudential PLC, Amazon.com
Inc., and Danaher Corp.
Risk Outlook
Loose financial conditions in the wake of the pandemic magnified a few pockets
of excess as 2021 came to a close, as prices of digital assets spiked and
so-called “meme stocks” soared to greater heights. In response, the
Investment Manager began to trim its exposures in November, focusing on
hyper-growth names that were most vulnerable to potential retail selling and
where multiples had more room to fall in a rising rate environment. The
correction in growth stocks in Q4 2021 yielded to a more substantial downdraft
in Q1 2022 driven by more enduring inflation, a quicker expected cadence to
rate hikes, the impending contraction of the U.S. Federal Reserve balance
sheet and the pervasive global effects of the Russian invasion of Ukraine. The
Investment Manager continued to reduce its aggregate market exposures through
this volatility, while at the same time reorienting the portfolio towards
cyclical- and commodity-oriented positions that are poised to benefit from an
inflationary backdrop, as well as toward event driven positions that are
reacting more to idiosyncratic developments rather than macro headlines.
The Investment Manager generally expects 2022 to yield more dispersion in
asset classes and individual positions as the world comes to terms with higher
interest rates and more persistent inflation. The near-term economic figures
could show some unevenness, but there remains pent-up demand for certain types
of consumer spending and capital expenditure. Thanks to the pandemic, the
market has favoured consumer goods purchasing at the expense of services and
experiences, and the inventory backdrop is normalizing rapidly, so there will
be winners and losers. The Firm also continues to watch the health of credit
markets, which have not yet experienced the same kind of capitulation that
characterized the vicious move down in Q1 2020 at the outset of COVID-19.
While the Russian invasion of Ukraine and strict lockdowns in China should
lengthen the inflation timeline, Third Point expects the headline numbers to
abate later in the year due to base effects from the previous year, and is
closely watching the effects on rents and wages.
Third Point enters 2022 with a more balanced portfolio in terms of
concentration and exposure to different factors. The Firm has always embraced
shifting market regimes, and now has dry powder to deploy opportunistically as
interesting new opportunities present themselves. In particular, Third Point
expects that 2022’s “normalization” will in some ways presage a return
to the Firm’s original mandate of event-driven, value-oriented investing,
and is focusing on undervalued event-driven names and activist public equities
with strong free cash flow profiles. It also expects excellent opportunities
in single name shorts to provide ballast. In the venture portfolio, the
fundamental technological trends that have driven recent successful public
market debuts are showing no signs of abating, and Third Point continues to
identify expansion stage companies that can benefit from the Firm’s track
record of engagement.
Exposure
Portfolio Composition as at 31 December 2021 (1) Long Short Net
Equity
Activism/Constructivism 16.4% -3.0% 13.5%
Fundamental & Event 93.1% -14.9% 78.2%
Portfolio Hedges (2) 0.0% -24.5% -24.5%
Total Equity 109.6% -42.4% 67.2%
Credit
Corporate & Sovereign 9.6% -0.1% 9.6%
Structured 19.1% 0.0% 19.1%
Total Credit 28.8% -0.1% 28.7%
Privates 8.9% 0.0% 8.9%
Side Pocket Privates 0.0% 0.0% 0.0%
Other (3) 1.4% 0.0% 1.4%
Total Portfolio 148.6% -42.5% 106.2%
Exposure
Equity Portfolio Composition as at 31 December 2021 Long Short Net
Equity Sectors
Consumer Discretionary 18.0% -3.9% 14.1%
Consumer Staples 0.6% -1.2% -0.6%
Utilities 6.8% -1.5% 5.3%
Energy 4.6% -0.9% 3.7%
Financials 17.7% -2.7% 15.0%
Healthcare 12.7% -1.2% 11.6%
Industrials & Materials 15.8% -4.0% 11.9%
Enterprise Technology 22.9% -1.7% 21.3%
Media & Internet 10.4% -0.8% 9.6%
Portfolio Hedges (2) 0.0% -24.5% -24.5%
Total 109.6% -42.4% 67.2%
(1) Unless otherwise stated, information relates to the Third Point Offshore
Master Fund L.P. Exposures are categorized in a manner consistent with the
Investment Manager’s classifications for portfolio and risk management
purposes.
(2) Primarily broad-based market and equity-based hedges.
(3) Includes currency hedges and macro investments. Rates and FX related
investments are excluded from the exposure figures.
Net equity exposure is defined as the long exposure minus the short exposure
of all equity positions (including long/short, arbitrage, and other
strategies), and can serve as a rough measure of the exposure to fluctuations
in overall market levels. The Investment Manager continues to closely monitor
the liquidity of the portfolio and is comfortable that the current composition
is aligned with the redemption terms available to the Company by virtue of its
holding of Class Y shares.
Independent Auditor’s Report
to the members of Third Point Investors Limited
Opinion
We have audited the financial statements of Third Point Investors Limited (the
‘Company’) for the year ended 31 December 2021 which comprise the
Statement of Assets and Liabilities, the Statement of Operations, the
Statement of Changes in Net Assets, the Statement of Cash Flows and the
related notes 1 to 14, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation
is applicable law and accounting principles generally accepted in the United
States of America.
In our opinion, the financial statements:
• give a true and fair view of the state of the
Company’s affairs as at 31 December 2021 and of its results for the year
then ended;
• have been properly prepared in accordance with
accounting principles generally accepted in the United States of America; and
• have been properly prepared in accordance with
the requirements of The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the Company and we remain independent of the Company in conducting
the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’
assessment of the Company’s ability to continue to adopt the going concern
basis of accounting included:
• The audit engagement partner directed and
supervised the audit procedures on going concern;
• We assessed the determination made by the Board
of Directors of the Company and the Investment Manager that the Company is a
going concern and hence the appropriateness of the financial statements to be
prepared on a going concern basis;
• We obtained the going concern assessment
prepared by the Investment Manager for the period up until 30 June 2023 and
tested for arithmetical accuracy and reasonability;
• We independently assessed the appropriateness of
the assumptions by reviewing historical forecasting accuracy; performing an
evaluation of the levels of liquidity of the Company’s investments in the
Master Partnership (Third Point Offshore Master Fund L.P.) through the Master
Fund (Third Point Offshore Fund, Ltd.) for future share buyback plans and
ongoing operating expenses; and applied a stress test to understand the impact
on liquidity of the Company as a whole;
• We assessed whether the liquidity of the Master
Partnership at the year end, taking account of the level of redemptions,
potential gating and its ability to meet periodic discretionary redemptions of
its investors, cast significant doubt over the going concern status of the
Company; and
• We assessed the disclosures in the Annual Report
and Financial Statements relating to going concern to ensure they were fair,
balanced and understandable.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period up until 30 June 2023.
In relation to the Company’s reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement
is not a guarantee as to the Company’s ability to continue as a going
concern.
Overview of our audit approach
Key audit matters • Investment Valuation
• Investment Existence and Ownership
Audit scope • We performed an
audit of the complete financial information of the Company for the year ended
31 December 2021.
Materiality • Overall
materiality of US$21.1 million which represents 2% of net assets.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation
of performance materiality determine our audit scope for the Company. This
enables us to form an opinion on the financial statements. We take into
account size, risk profile, the organisation of the Company and effectiveness
of controls, including controls and changes in the business environment when
assessing the level of work to be performed.
All audit work was performed directly by the audit engagement team. The audit
was led from Guernsey, and the audit team included individuals from the
Guernsey and New York offices of Ernst & Young and operated as an integrated
audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Risk Our response to the risk Key observations communicated to the Audit Committee
Valuation of investments (US$1,202m, PY comparative US$934m) Refer to the Report of the Audit Committee; Accounting policies The investments held are measured at fair value through profit or loss, and their fair value is determined by reference to the published NAV per share of the investee fund, as calculated by its independent Administrator. The valuation risk considers the risk of an error in the application of the published NAV per share, obtained from the independent Administrator of the investee fund, when calculating the fair value of the Company’s investments, as well as the effect on valuation of any gating/suspension of redemptions by the investee fund. Our response comprised of substantive audit testing of investment valuation, including: • Agreeing the valuation per share of the Company’s investments in the investee We confirmed that there were no matters identified during our work on valuation of investments that we wanted to bring to the attention of the Audit Committee.
fund to the NAV per share of the investee fund in the confirmation obtained from its independent Administrator; • Agreeing the valuation per share of the Company’s
investments in the investee fund to the NAV per share of the investee fund per its audited financial statements for the year ended 31 December 2021, which were approved
on 18 March 2022; • Directing Ernst & Young in New York to perform testing on our behalf and reporting that no material adjustments to the NAV were required; and •
Reviewing the subscriptions and redemptions schedule of the investee fund around the year-end date to assess the liquidity of the Company’s investments in the investee
fund.
Investment existence and ownership (US$1,202m, PY comparative US$934m) Refer to the Report of the Audit Committee; Accounting policies Risk that the investments presented in the financial statements do not exist or the Company does not have the rights to cash flows derived from them. Failure to obtain good title exposes the Company to significant risk of loss. Our response comprised the performance of substantive audit testing of investment existence and ownership including: • Obtaining a confirmation, as at 31 December 2021, We confirmed there were no matters identified during our audit work on existence and ownership of investments that we wanted to bring to the attention of the Audit Committee.
of the Company’s holdings in the investee fund into which the Company invests, from the independent Administrator of the investee fund, and agreeing it to the accounting
records of the Company; and • Agreeing supporting documentation for all additions and disposals of holdings in the investee fund that took place during the year ended 31
December 2021, and agreeing the details to the accounting records of the Company.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of
the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Company to be US$21.1million (2020: US$18.8
million), which is approximately 2% (2020: 2%) of net assets. We believe that
net assets provides us with an appropriate basis for audit materiality as it
is a key published performance measure and is a key metric used by management
in assessing and reporting on overall performance.
Performance materiality
The application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our assessment of the
Company’s overall control environment, our judgement was that performance
materiality was 75% (2020: 75%) of our planning materiality, namely US$15.9
million (2020: US$14.1 million). We have set performance materiality at this
percentage because we have considered the likelihood of misstatements to be
low. We have considered both quantitative and qualitative factors when
determining the expected level of misstatements and setting the performance
materiality at this level.
Reporting threshold
An amount below which identified misstatements are considered as being clearly
trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of US$1.1 million (2020: US$0.9
million), which is set at 5% (2020: 5%) of materiality, as well as differences
below that threshold that, in our view, warranted reporting on qualitative
grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual Report
other than the financial statements and our auditor’s report thereon. The
directors are responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in this report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to
which The Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept
by the Company; or
• the financial statements are not in agreement
with the Company’s accounting records and returns; or
• we have not received all the information and
explanations we require for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge obtained during the
audit:
• Directors’ statement with regards to the
appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified;
• Directors’ explanation as to its assessment of
the Company’s prospects, the period this assessment covers and why the
period is appropriate;
• Director’s statement on whether it has a
reasonable expectation that the Company will be able to continue in operation
and meets its liabilities;
• Directors’ statement on fair, balanced and
understandable;
• Board’s confirmation that it has carried out a
robust assessment of the emerging and principal risks;
• The section of the annual report that describes
the review of effectiveness of risk management and internal control systems;
and
• The section describing the work of the audit
committee.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion. The
extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud
rests with both those charged with governance of the Company and management.
• We obtained an understanding of the legal and
regulatory frameworks that are applicable to the Company and determined that
the most significant are:
o Financial Conduct Authority
(“FCA”) Listing Rules
o Disclosure Guidance and Transparency
Rules (“DTR”) of the FCA
o The UK Corporate Governance Code
o The 2019 AIC Code of Corporate
Governance
o The Companies (Guernsey) Law, 2008,
as amended
• We understood how the Company is complying with
those frameworks by:
o Discussing the processes and
procedures used by the Directors, the Investment Manager, the Company
Secretary and Administrator to ensure compliance with the relevant frameworks;
o Reviewing internal reports that
evidenced quarterly compliance testing; and
o Inspecting any correspondence with
regulators.
• We assessed the susceptibility of the
Company’s Financial Statements to material misstatement, including how fraud
might occur by undertaking the audit procedures set out in Key Audit Matters
section above and reading the Financial statements to check that the
disclosures are consistent with the relevant regulatory requirements; and
• Based on this understanding we designed our
audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved:
o Making enquiries and gaining an
understanding of how those charged with governance, the Investment Manager,
the Company Secretary and Administrator identify instances of non-compliance
by the Company with relevant laws and regulations;
o Inspecting the relevant policies,
processes and procedures to further our understanding;
o Enquiring of the Company’s
nominated Compliance Officer;
o Reviewing internal compliance
reporting, Board and Audit Committee minutes;
o Inspecting correspondence with
regulators; and
o Obtaining relevant written
representations from the Board of Directors.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit
committee, we were appointed by the Company to audit the financial statements
for the year ending 31 December 2007 and subsequent financial periods.
• The period of total uninterrupted engagement
including previous renewals and reappointments is fifteen years, covering the
years ending 31 December 2007 to 31 December 2021.
• The audit opinion is consistent with the
additional report to the audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit
work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for the opinions we
have formed.
David Robert John Moore, ACA
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
25 April 2022
Notes:
1. The maintenance and integrity of the
Company’s website is the sole responsibility of the Directors; the work
carried out by the auditors does not involve consideration of these matters
and, accordingly, the auditor accepts no responsibility for any changes that
may have occurred to the Financial Statements since they were initially
presented on the website.
2. Legislation in the Guernsey governing the
preparation and dissemination of Financial Statements may differ from
legislation in other jurisdictions.
Statement of Assets and Liabilities
(Stated in United States Dollars) As at 31 December 2021 US$ As at 31 December 2020 US$
Assets
Investment in Third Point Offshore Fund, Ltd at fair value (Cost: US$462,831,750; 31 December 2020: US$336,169,626) 1,201,798,462 934,270,592
Cash and cash equivalents 465,592 38,891
Due from broker 11,766 11,764
Redemption receivable 4,776,165 5,923,042
Other assets 13,144 47,986
Total assets 1,207,065,129 940,292,275
Liabilities
Accrued expenses and other liabilities 600,779 281,734
Loan facility (Note 4) 148,563,430 –
Loan interest payable 655,012 –
Administration fee payable (Note 5) 3,386 3,417
Total liabilities 149,822,607 285,151
Net assets 1,057,242,522 940,007,124
Number of Ordinary Shares in issue (Note 7)
US Dollar Shares 32,658,497 35,904,437
Net asset value per Ordinary Share (Notes 9 and 12)
US Dollar Shares $32.37 $26.18
Number of Ordinary B Shares in issue (Note 7)
US Dollar Shares 21,772,330 23,936,291
The financial statements were approved by the Board of Directors on 25 April
2022 and signed on its behalf by:
Rupert Dorey
Chairman
Huw Evans
Director
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund, Ltd. and Third Point Offshore Master Fund L.P.
Statement of Operations
(Stated in United States Dollars) For the year ended 31 December 2021 US$ For the year ended 31 December 2020 US$
Realised and unrealised gain from investment transactions allocated from Master Fund
Net realised gain from securities, derivative contracts and foreign currency translations 261,882,322 27,781,054
Net change in unrealised (loss)/gain on securities, derivative contracts and foreign currency translations (2,924,913) 159,909,252
Net loss from currencies allocated from Master Fund (40,560) (1,255,793)
Total net realised and unrealised gain from investment transactions allocated from Master Fund 258,916,849 186,434,513
Net investment loss allocated from Master Fund
Interest income 20,805,290 20,720,175
Dividends, net of withholding taxes of US$2,369,507; (31 December 2020: US$1,241,176) 3,005,047 2,926,607
Other income 27,594 728,298
Incentive allocation (Note 2) (52,989,103) (29,008,609)
Stock borrow fees (1,781,716) (445,429)
Investment Management fee (13,327,304) (9,939,250)
Dividends on securities sold, not yet purchased (6,131,553) (2,625,250)
Interest expense (2,023,056) (2,228,533)
Other expenses (3,387,734) (2,613,256)
Total net investment loss allocated from Master Fund (55,802,535) (22,485,247)
Company expenses
Administration fee (Note 5) (194,267) (155,789)
Directors’ fees (Note 6) (280,566) (284,125)
Other fees (2,370,222) (939,799)
Loan interest expense (Note 4) (1,128,956) –
Expenses paid on behalf of Third Point Offshore Independent Voting Company Limited1 (Note 4) (115,481) (101,931)
Total Company expenses (4,089,492) (1,481,644)
Net loss (59,892,027) (23,966,891)
Net increase in net assets resulting from operations 199,024,822 162,467,622
(1) Third Point Offshore Independent Voting Company Limited consists of
Director Fees, Audit Fee and General Expenses.
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund, Ltd. and Third Point Offshore Master Fund L.P.
Statement of Changes in Net Assets
(Stated in United States Dollars) For the year ended 31 December 2021 US$ For the year ended 31 December 2020 US$
Increase in net assets resulting from operations
Net realised gain from securities, commodities, derivative contracts and foreign currency translations allocated from Master Fund 261,882,322 27,781,054
Net change in unrealised (loss)/gain on securities, derivative contracts and foreign currency translations allocated from Master Fund (2,924,913) 159,909,252
Net loss from currencies allocated from Master Fund (40,560) (1,255,793)
Total net investment loss allocated from Master Fund (55,802,535) (22,485,247)
Total Company expenses (4,089,492) (1,481,644)
Net increase in net assets resulting from operations 199,024,822 162,467,622
Decrease in net assets resulting from capital share transactions
Share redemptions (81,789,424) (57,025,303)
Net assets at the beginning of the year 940,007,124 834,564,805
Net assets at the end of the year 1,057,242,522 940,007,124
See accompanying notes and attached Audited Financial Statements of Third
Point Offshore Fund, Ltd. and Third Point Offshore Master Fund L.P.
Statement of Cash Flows
(Stated in United States Dollars) For the year ended 31 December 2021 US$ For the year ended 31 December 2020 US$
Cash flows from operating activities
Operating expenses (2,016,335) (970,124)
Interest paid (185,685) –
Directors’ fees (280,566) (284,125)
Administration fee (194,298) (195,587)
Third Point Offshore Independent Voting Company Limited (1) (115,481) (101,931)
Change in investment in the Master Fund (145,056,105) 1,479,965
Cash outflow from operating activities (147,848,470) (71,802)
Cash flows from financing activities
Loan facility 150,000,000 –
Payment of loan costs (1,724,829) –
Cash inflow from financing activities 148,275,171 –
Net increase/(decrease) in cash 426,701 (71,802)
Cash and cash equivalents at the beginning of the year 38,891 110,693
Cash and cash equivalents at the end of the year 465,592 38,891
(1) Third Point Offshore Independent Voting Company Limited consists of
Director Fees, Audit Fee and General Expenses.
(Stated in United States Dollars) For the year ended 31 December 2021 US$ For the year ended 31 December 2019 US$
Supplemental disclosure of non-cash transactions from:
Operating activities
Redemption of Company Shares from Master Fund 81,789,424 57,025,303
Financing activities
Share redemptions (81,789,424) (57,025,303)
Amortisation of loan cost 288,259 –
See accompanying notes and attached Audited Financial Statements of Third
Point Offshore Fund, Ltd. and Third Point Offshore Master Fund L.P.
Notes to the Audited Financial Statements
For the year ended 31 December 2021
1. The Company
Third Point Investors Limited (the “Company”) is an authorised
closed-ended investment company incorporated in Guernsey on 19 June 2007 for
an unlimited period, with registration number 47161. The Company commenced
operations on 25 July 2007.
2. Organisation
Investment Objective and Policy
The Company’s investment objective is to provide its Shareholders with
consistent long term capital appreciation, utilising the investment skills of
the Investment Manager, through investment of all of its capital (net of
short-term working capital requirements) through a master-feeder structure in
shares of Third Point Offshore Fund, Ltd. (the “Master Fund”), an exempted
company formed under the laws of the Cayman Islands on 21 October 1996. In
connection with taking out the loan facility announced on 1 April, on 1
September, the Company exchanged its holding in Class N Shares for an
equivalent holding in Class Y Shares which offers principally the same terms
as Class N Shares save for increased liquidity if there is an event of default
under the terms of the loan agreement.
The Master Fund’s investment objective is to seek to generate consistent
long-term capital appreciation, by investing capital in securities and other
instruments in select asset classes, sectors and geographies, by taking long
and short positions. The Master Fund is managed by the Investment Manager and
the Investment Manager’s implementation of the Master Fund’s investment
policy is the main driver of the Company’s performance. The Master Fund
invests all of its investable capital in Third Point Offshore Master Fund L.P.
(the “Master Partnership”) a corresponding open-ended investment
partnership having the same investment objective as the Master Fund.
The Master Fund is a limited partner of the Master Partnership, an exempted
limited partnership organised under the laws of the Cayman Islands, of which
Third Point Advisors II L.L.C., an affiliate of the Investment Manager, is the
general partner. Third Point LLC is the Investment Manager to the Company, the
Master Fund and the Master Partnership. The Master Fund and the Master
Partnership share the same investment objective, strategies and restrictions
as described above.
Investment Manager
The Investment Manager is a limited liability company formed on 28 October
1996 under the laws of the State of Delaware. The Investment Manager was
appointed on 29 June 2007 and is responsible for the management and investment
of the Company’s assets on a discretionary basis in pursuit of the
Company’s investment objective, subject to the control of the Company’s
Board and certain borrowing and leveraging restrictions.
During the year ended 31 December 2021, the Company paid to the Investment
Manager at the level of the Master Partnership a fixed management fee of 1.25
percent of NAV per annum and a general partner incentive allocation of 20
percent of the Master Fund’s NAV growth (“Full Incentive Fee”) invested
in the Master Partnership, subject to certain conditions and related
adjustments, by the Master Fund. The general partner receives an incentive
allocation equal to 20% of the net profit allocated to each Shareholder
invested in each series of Class Y shares. If a Shareholder invested in Third
Point Offshore Fund, Ltd. (the “Feeder Fund”) has a net loss during any
fiscal year and, during subsequent years, there is a net profit attributable
to such Shareholder, the Shareholder must recover the amount of the net loss
attributable in the prior years before the General Partner is entitled to
incentive allocation. Class Y shares are subject to a 25% investor level gate.
The Company’s investment in the Master Fund is subject to an investor-level
gate whereby a Shareholder’s aggregate redemptions will be limited to 25%,
33.33%, 50%, and 100% of the cumulative net asset value of such Class Y shares
held by the Shareholder as of any four consecutive quarters. Redemptions are
permitted on a monthly basis but not to exceed these thresholds. Additionally,
the Master Fund has a 20% fund-level gate. The fund level gate allows for
redemptions up to 20% of the Master Fund’s assets on a quarterly basis,
subject to the discretion of the Board of Directors of the Master Fund.
The Company was allocated US$52,989,103 (31 December 2020: US$29,008,609) of
incentive fees for the year ended 31 December 2021.
3. Significant Accounting Policies
Basis of Presentation
These Audited Financial Statements have been prepared in accordance with
relevant accounting principles generally accepted in the United States of
America (“US GAAP”). The functional and presentation currency of the
Company is United States Dollars (“$US”).
The Directors have determined that the Company is an investment company in
conformity with US GAAP. Therefore the Company follows the accounting and
reporting guidance for investment companies in the Financial Accounting
Standards Board (‘‘FASB’’) Accounting Standards Codification
(‘‘ASC’’) 946, Financial Services – Investment Companies (‘‘ASC
946’’).
The following are the significant accounting policies adopted by the Company:
Cash and cash equivalents
Cash in the Statement of Assets and Liabilities and for the Statement of Cash
Flows is unrestricted and comprises cash at bank and on hand.
Due from broker
Due from broker includes cash balances held at the Company’s clearing broker
as of 31 December 2021. The Company clears all of its securities transactions
through a major international securities firm, UBS (the “Prime Broker”),
pursuant to agreements between the Company and Prime Broker.
Redemptions Receivable
Redemptions receivable are capital withdrawals from the Master Fund which have
been requested but not yet settled as at 31 December 2021.
Valuation of Investments
The Company records its investment in the Master Fund at fair value. Fair
values are generally determined utilising the net asset value (“NAV”)
provided by, or on behalf of, the underlying investment managers of each
investment fund. In accordance with Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 820 “Fair
Value Measurement”, fair value is defined as the price the Company would
receive upon selling a security in a timely transaction to an independent
buyer in the principal or most advantageous market of the security. Until 1
September 2021, the Company owned Class E and Class N shares of the Master
Fund which were exchanged into Class Y shares on that date. During the year,
the Company recorded non-cash redemptions of $80,412,547 (205,609 shares) for
the cancellation of the Company shares related to the share buyback programme
and redeemed $3,173,897 (7,767 shares) to pay Company expenses. The following
schedule details the share classes relevant to the Company’s investment in
the Master Fund at 31 December 2021.
Shares Outstanding at 1 January 2021 Shares Rolled Up Shares Transferred In Shares Transferred Out Shares Issued Shares Redeemed Shares Outstanding at 31 December 2020 Net Asset Value Per Share at 31 December2020* Net Asset Value at 31 December 2020
Class Y – 1.25, Series 1 — — — — 490,000 — 490,000 98.39 48,208,991
Class Y – 1.25, Series 1-1 — — 2,275,763 — — — 2,275,763 420.13 956,126,401
Class Y – 1.25, Series 1-2 — — 22,699 — — — 22,699 419.86 9,530,383
Class Y – 1.25, Series 1-3 — — 451 — — — 451 417.31 188,377
Class Y – 1.25, Series 1.4 — — — — 441,000 — 441,000 94.20 41,543,501
Class Y – 1.25, Series 1.5 — — — — 450,000 — 450,000 89.58 40,310,519
Class Y – 1.25, Series 2 — — — — 49,000 — 49,000 94.20 4,615,944
Class Y – 1.25, Series 2-1 — — 268,172 — — (37,780) 230,392 420.13 96,795,399
Class Y – 1.25, Series 2-2 — — — — 50,000 — 50,000 89.58 4,478,947
Class E – 1.75, Series 7 — — 92,451 — — (92,451) — — —
Class N –1.25, Series 9 2,721,631 — — (2,687,238) — (34,393) — — —
Class E – 1.75, Series 13 — — 50,852 (22,700) — (28,152) — — —
Class E – 1.75, Series 65 30 21,022 — (451) — (20,601) — — —
Class E – 1.75, Series 96 6,512 (6,512) — — — — — — —
Class E – 1.75, Series 103 14,452 (14,452) — — — — — — —
Total 1,201,798,462
The valuation of securities held by the Master Partnership, in which the
Master Fund directly invests, is discussed in the notes to the Master
Partnership’s Audited Financial Statements. The net asset value of the
Company’s investment in the Master Fund reflects its fair value. At 31
December 2021, the Company’s US Dollar shares represented 14.74% (31
December 2020: 13.54%) of the Master Fund’s NAV.
The Company has adopted ASU 2015-07, Disclosures for Investments in Certain
Entities that calculate Net Asset Value per Share (or its equivalent) (“ASU
2015-07”), in which certain investments measured at fair value using the net
asset value per share method (or its equivalent) as a practical expedient are
not required to be categorised in the fair value hierarchy. Accordingly the
Company has not levelled applicable positions.
Uncertainty in Income Tax
ASC Topic 740 “Income Taxes” requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Company’s tax
returns to determine whether the tax positions are “more- likely-than-not”
of being sustained by the applicable tax authority based on the technical
merits of the position. Tax positions deemed to meet the
“more-likely-than-not” threshold would be recorded as a tax benefit or
expense in the year of determination. Management has evaluated the
implications of ASC 740 and has determined that it has not had a material
impact on these Audited Financial Statements.
Income and Expenses
The Company records its proportionate share of the Master Fund’s income,
expenses and realised and unrealised gains and losses on a monthly basis. In
addition, the Company accrues interest income, to the extent it is expected to
be collected, and other expenses.
Use of Estimates
The preparation of these Audited Financial Statements in conformity with US
GAAP may require management to make estimates and assumptions that affect the
amounts and disclosures in the financial statements and accompanying notes.
Actual results could differ from those estimates. Other than what is
underlying in the Master Fund and the Master Partnership, the Company does not
use any material estimates in respect of the Audited Financial Statements.
Going Concern
The Master Fund Shares are liquid and can be converted to cash to meet
liabilities as they fall due. Although these shares are subject to a 25%
quarterly investor level redemption gate, the Board considers this to be
sufficient for normal requirements. After due consideration of the period to
30 June 2023, and having made due enquiry, given the nature of the Company and
its investments, the Directors are satisfied that it is appropriate to
continue to adopt the going concern basis in preparing these Audited Financial
Statements.
Foreign Exchange
Investment securities and other assets and liabilities denominated in foreign
currencies are translated into United States Dollars using exchange rates at
the reporting date. Purchases and sales of investments and income and expense
items denominated in foreign currencies are translated into United States
Dollars at the date of such transaction. All foreign currency transaction
gains and losses are included in the Statement of Operations.
Recent accounting pronouncements
The Company has not early adopted any standards, interpretation or amendment
that has been issued but are not yet effective. The amendments and
interpretations which apply for the first time in 2021 have been assessed and
do not have an impact on the Audited Financial Statements.
Loan Facility
The Company accounts for the credit facility as a liability, initially
recognized at the amount drawn less any related costs. Issuance costs are
amortized and recognized as additional interest expense over the life of the
loan. These expenses will impact the Company’s net income for the remaining
amortization period. The liability is adjusted for the repayment of principle,
accrual of interest and amortization of issuance costs. At maturity of the
facility, the company expects to make a payment in cash to the issuer for
release of any related obligations.
4. Loan Facility
On 1 September 2021, the Company entered into an agreement for a credit
facility with JPMorgan Chase Bank, N.A., effective 1 September 2021, to employ
gearing with the intention of enhancing the Company’s returns. The credit
facility allowed the Company to borrow $150 million at a rate of LIBOR plus
2.4% for a period of two years. The investment in the Master Fund serves as
the security for the credit facility. The credit facility matures on 31 August
2023. The agreement provides that the company will pay interest on a quarterly
basis. The credit facility was fully drawn as of 31 December 2021. The
proceeds were invested in the Third Point Offshore Fund, Ltd. during 2021. In
conjunction with the negotiation and execution of the Agreement there were
costs incurred by the Company. The Company paid the issuer of the facility
$375,000 as a structuring fee and paid other loan related costs, such as legal
costs, of $1,349,829 which is included as a direct reduction in the liability
on the Statement of Assets and Liabilities expensed over the life of the loan.
5. Material Agreements
Management and Incentive fees
The Investment Manager was appointed by the Company to invest its assets in
pursuit of the Company’s investment objectives and policies. As disclosed in
Note 2, the Investment Manager is remunerated by the Master Partnership by way
of management fees and incentive fees.
Administration fees
Under the terms of an Administration Agreement dated 29 June 2007, the Company
appointed Northern Trust International Fund Administration Services (Guernsey)
Limited as Administrator (the “Administrator”) and Corporate Secretary.
The Administrator is paid fees based on the NAV of the Company, payable
quarterly in arrears. The fee is at a rate of 2 basis points of the NAV of the
Company for the first £500 million of NAV and a rate of 1.5 basis points for
any NAV above £500 million. This fee is subject to a minimum of £4,250 per
month. The Administrator is also entitled to an annual corporate governance
fee of £30,000 for its company secretarial and compliance activities.
In addition, the Administrator is entitled to be reimbursed out-of-pocket
expenses incurred in the course of carrying out its duties, and may charge
additional fees for certain other services.
Total Administrator expenses during the year amounted to US$194,267 (31
December 2020: US$155,789) with US$3,386 outstanding (31 December 2020:
US$3,417) at the year-end.
Related Party
The Company has entered into a support and custody agreement with Third Point
Offshore Independent Voting Company Limited (“VoteCo”) whereby, in return
for the voting services provided by VoteCo, the Company will provide VoteCo
with funds from time-to-time in order to enable VoteCo to meet its obligations
as they fall due. Under this agreement, the Company has also agreed to pay all
the expenses of VoteCo, including the fees of the directors of VoteCo, the
fees of all advisors engaged by the directors of VoteCo and premiums for
directors’ and officers’ insurance. The Company has also agreed to
indemnify the directors of VoteCo in respect of all liabilities that they may
incur in their capacity as directors of VoteCo. The expense paid by the
Company on behalf of VoteCo during the year is outlined in the Statement of
Operations and amounted to US$115,481 (31 December 2020: US$101,931). As at 31
December 2021 expenses accrued by the Company on behalf of VoteCo amounted to
US$23,525 (31 December 2020: US$7,364).
6. Directors’ Fees
At the AGM in July 2020, Shareholders approved an annual fee cap for the
directors as a whole of £500,000.
For the year ended 31 December 2021, the Chairman received a fee of £68,000
per annum. Mr. Evans received £50,000 per annum as the audit committee
chairman. Ms. Whittet and Mr. Dorey in their roles as chairperson of the
Management Engagement Committee and the Nomination and Remuneration Committee
respectively, received £43,000 per annum. The Directors’ fees during the
year amounted to US$280,566 (31 December 2020: US$284,125) with US$nil
outstanding (31 December 2020: US$nil).
The Directors are also entitled to be reimbursed for expenses properly
incurred in the performance of their duties as Director.
7. Stated Capital
The Company was incorporated with the authority to issue an unlimited number
of Ordinary Shares (the “Shares”) with no par value and an unlimited
number of Ordinary B Shares (“B Shares”) of no par value.
US Dollar Shares
Number of Ordinary Shares
Shares issued 1 January 2021 35,904,437
Shares Cancelled
Total shares cancelled during the year (3,245,940)
Shares in issue at end of year 32,658,497
US Dollar Shares US$
Stated Capital Account
Stated capital account at 1 January 2021 198,606,167
Shares Cancelled
Total share value cancelled during the year (81,789,424)
Stated Capital account at end of year 116,816,743
Retained earnings 940,425,779
US Dollar Shares
Number of Ordinary B Shares
Shares in issue as at 1 January 2021 23,936,291
Shares Cancelled
Total shares cancelled during the year (2,163,961)
Shares in issue at end of year 21,772,330
Voting Rights
Ordinary Shares carry the right to vote at general meetings of the Company and
to receive any dividends, attributable to the Ordinary Shares as a class,
declared by the Company and, in a winding- up will be entitled to receive, by
way of capital, any surplus assets of the Company attributable to the Ordinary
Shares as a class in proportion to their holdings remaining after settlement
of any outstanding liabilities of the Company. B Shares also carry the right
to vote at general meetings of the Company but carry no rights to distribution
of profits or in the winding-up of the Company.
As prescribed in the Company’s Articles, each Shareholder present at general
meetings of the Company shall, upon a show of hands, have one vote. Upon a
poll, each Shareholder shall, in the case of a separate class meeting, have
one vote in respect of each Share or B Share held and, in the case of a
general meeting of all Shareholders, have one vote in respect of each Share or
B Share held. Fluctuations in currency rates will not affect the relative
voting rights applicable to the Shares and B Shares. In addition all of the
Company’s Shareholders have the right to vote on all material changes to the
Company’s investment policy.
Repurchase of Shares
At each AGM, the Directors seek authority from the Shareholders to purchase in
the market for the forthcoming year up to 14.99 percent of the Shares in
issue. Pursuant to this repurchase authority, the Company, through the Master
Fund, commenced a share repurchase program in 2007. The Shares initially
purchased were held by the Master Partnership. The Master Partnership’s
gains or losses and implied financing costs related to the shares purchased
through the share purchase programme are entirely allocated to the Company’s
investment in the Master Fund.
On 26 September 2019, it was announced that the Company, again through the
Master Fund, will seek to buy back, at the Board’s discretion and subject to
the requirement to buy no more than 14.99% of its outstanding stocks between
general meetings, up to $200 million worth of stock over the subsequent three
years. Any shares traded mid-month will be purchased and held by the Master
Partnership until the Company is able to cancel the shares following each
month-end. As at 31 December 2021, the Master Partnership held 157,416 shares
of the Company – these shares were subsequently cancelled in January 2022.
Further issue of Shares
Under the Articles, the Directors have the power to issue further shares on a
non-pre-emptive basis. If the Directors issue further Shares, the issue price
will not be less than the then-prevailing estimated weekly NAV per Share of
the relevant class of Shares.
8. Taxation
The Fund is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989.
9. Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets less its
total liabilities. The NAV per Share is calculated by dividing the NAV by the
number of Ordinary Shares in issue on that day.
10. Related Party Transactions
At 31 December 2021, other investment funds owned by or affiliated with the
Investment Manager owned 5,705,443 (31 December 2020: 5,630,444) US Dollar
Shares in the Company. Refer to note 5 and note 6 for additional Related Party
Transaction disclosures.
11. Significant Events
On 1 April 2021, the Directors announced several changes aimed at enhancing
the strength of the Company following a detailed strategic review in close
partnership with the Investment Manager. These are described in the
Chairman’s statement and will be implemented over the next six years.
On 1 September, the Company exchanged its holdings in Class E Shares and Class
N Shares of the Master Fund for an equivalent holding in Class Y Shares.
On 1 September, it was announced that a credit facility of $150 million had
been agreed with the intention of deploying this capital over the following
quarter.
At an EGM held on 1 December, Shareholders approved an exchange mechanism
under which eligible shareholders would be able to exchange their shares in
the Company for up to an aggregate of $75 million of shares in the Master Fund
at a 2% discount to NAV.
In the second half of the year, the Board received two separate requests from
the same group of shareholders representing 10% of the voting rights to hold a
general meeting at which a vote would be held to allow short term liquidity at
close to NAV. The Board sought legal advice on these requests and as a result
declined to hold the votes on the grounds that, if passed, they would be
ineffective in directing board decisions. These shareholders then
requisitioned a vote to remove Josh Targoff as a Director of the Company. This
was put to all Shareholders at the EGM on 1 December and the resolution was
not passed.
Mr. Steve Bates resigned from the Board with effect 22 December 2021.
A further requisition was made by some shareholders following the year end
which was withdrawn at the time of the announcement of Board changes made on 1
March 2022. Further details are set out in the Chairman’s Statement and in
the Subsequent Events note to the Financial Statements.
In the year to 31 December 2021, 3.1 million shares were repurchased with a
value of approximately $79 million, at a weighted average discount to NAV of
-16.5%. This had the effect of accreting 46 cents per share to NAV.
There were no other events during the financial year which require disclosure
in the Audited Financial Statements.
12. Financial Highlights
The following tables include selected data for a single Ordinary Share in
issue at the year-end and other performance information derived from the
Audited Financial Statements.
US Dollar Shares 31 December 2021 US$
Per Share Operating Performance
Net Asset Value beginning of the year 26.18
Income from Operations
Net realised and unrealised gain from investment transactions allocated from Master Fund 5.85
Net loss (0.12)
Total Return from Operations 5.73
Share buyback accretion 0.46
Net Asset Value, end of the year 32.37
Total return before incentive fee allocated from Master Fund 28.41%
Incentive allocation from Master Fund (Note 2) (4.77%)
Total return after incentive fee allocated from Master Fund 23.64%
Total return from operations reflects the net return for an investment made at
the beginning of the year and is calculated as the change in the NAV per
Ordinary Share during the year ended 31 December 2021 and is not annualised.
An individual Shareholder’s return may vary from these returns based on the
timing of their purchases and sales of shares on the market.
US Dollar Shares 31 December 2020 US$
Per Share Operating Performance
Net Asset Value beginning of the year 21.15
Income from Operations
Net realised and unrealised gain from investment transactions allocated from Master Fund 4.56
Net loss (0.04)
Total Return from Operations 4.52
Share buyback accretion 0.51
Net Asset Value, end of the year 26.18
Total return before incentive fee allocated from Master Fund 26.84%
Incentive allocation from Master Fund (Note 2) (3.06%)
Total return after incentive fee allocated from Master Fund 23.78%
Total return from operations reflects the net return for an investment made at
the beginning of the year and is calculated as the change in the NAV per
Ordinary Share during the year ended 31 December 2020 and is not annualised.
An individual Shareholder’s return may vary from these returns based on the
timing of their purchases and sales of shares on the market.
US Dollar Shares 31 December 2021 US$
Supplemental data
Net Asset Value, end of the year 1,057,242,522
Average Net Asset Value, for the year (1) 1,044,204,635
Ratio to average net assets
Operating expenses (2) (2.94%)
Incentive fee allocated from Master Fund (5.07%)
Total operating expense (2) (8.01%)
Net loss (5.74%)
US Dollar Shares 31 December 2020 US$
Supplemental data
Net Asset Value, end of the year 940,007,124
Average Net Asset Value, for the year (1) 803,709,517
Ratio to average net assets
Operating expenses (2) (2.41%)
Incentive fee allocated from Master Fund (3.61%)
Total operating expense (2) (6.02%)
Net loss (2.98%)
(1) Average Net Asset Value for the year is calculated based on published
monthly estimates of NAV.
(2) Operating expenses are Company expenses together with operating expenses
allocated from the Master Fund.
13. Ongoing Charge Calculation
Ongoing charges for the year ended 31 December 2021 and 31 December 2020 have
been prepared in accordance with the AIC recommended methodology. Performance
fees were charged to the Master Fund. In line with AIC guidance, an Ongoing
Charge has been disclosed both including and excluding performance fees. The
Ongoing charges for year ended 31 December 2021 and 31 December 2020 excluding
performance fees and including performance fees are based on Company expenses
and allocated Master Fund expenses outlined below.
(excluding performance fees) 31 December 2021 31 December 2020
US Dollar Shares 1.91% 1.75%
(including performance fees) 31 December 2021 31 December 2020
US Dollar Shares 6.99% 5.36%
14. Subsequent Events
As at 31 December 2021, the Master Partnership held 157,416 shares of the
Company – these shares were subsequently cancelled in January 2022.
A further requisition was made by some shareholders following the year end.
The Board engaged with the requisitionists and, in February 2022, both the
Company and the requisitionists came to a mutually agreed position to
strengthen the Board, further endorsing its independence and capability. This
then led to the announcement of the appointment of Richard Boléat and Vivien
Gould to the Board with effect from 1 March 2022. Mr. Rupert Dorey was
appointed Chairman of the Board with effect 18 February 2022.
On 18 March 2022 the Company announced that it had received valid requests in
respect of 6,136,895 TPIL Shares under the Exchange Facility announced on 11
January 2022. This was in excess of the $75 million available under the
Exchange Facility and all valid exchange requests will, therefore, only be met
in part. In determining the number of TPIL shares to be exchanged, the Board
intends to use the NAV as at 31 March 2022 and the number of TPIL Shares to be
exchanged will be calculated when the 31 March NAV is finalised. Each validly
electing shareholder will then exchange that proportion of the number of TPIL
Shares that its application bears to the total number of valid exchange
applications received. It is currently expected that approximately 43% of TPIL
Shares subject to valid exchange requests will be exchanged into Master Fund
Shares but this will be confirmed following finalisation of the NAV per Master
Fund Share and per TPIL Share as at 31 March 2022.
The Directors confirm that, up to the date of approval, which is 25 April
2022, when these Audited Financial Statements were available to be issued,
there have been no other events subsequent to the balance sheet date that
require inclusion or additional disclosure.
Management and Administration
Directors
Steve Bates* (1) Vivien Gould* (2)
PO Box 255, Trafalgar Court, Les Banques, PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, St Peter Port, Guernsey,
Channel Islands, GY1 3QL. Channel Islands, GY1 3QL.
Richard Boléat* (2) Joshua L Targoff
PO Box 255, Trafalgar Court, Les Banques, PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, St Peter Port, Guernsey,
Channel Islands, GY1 3QL. Channel Islands, GY1 3QL.
Rupert Dorey (Chairman)* (3) Claire Whittet*
PO Box 255, Trafalgar Court, Les Banques, PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, St Peter Port, Guernsey,
Channel Islands, GY1 3QL. Channel Islands, GY1 3QL.
Huw Evans* * These Directors are independent.
PO Box 255, Trafalgar Court, Les Banques, (1) Mr. Bates resigned from the Board with effect 22 December
St Peter Port, Guernsey, 2021.
Channel Islands, GY1 3QL. (2) Mr. Boléat and Ms. Gould were appointed to the Board as
independent non-executive directors effective 1 March 2022.
Investment Manager (3) Mr. Rupert Dorey was appointed Chairman of the Board with
Third Point LLC effect 18 February 2022.
55 Hudson Yards,
New York, NY 10001, Administrator and Secretary
United States of America. Northern Trust International Fund
Administration Services (Guernsey) Limited,
Auditors PO Box 255, Trafalgar Court, Les Banques,
Ernst & Young LLP St Peter Port, Guernsey,
PO Box 9, Royal Chambers Channel Islands, GY1 3QL.
St Julian’s Avenue,
St Peter Port, Guernsey, Legal Advisors (Guernsey Law)
Channel Islands, GY1 4AF. Mourant
Royal Chambers, St Julian’s Avenue,
Legal Advisors (UK Law) St Peter Port, Guernsey,
Herbert Smith Freehills LLP Channel Islands, GY1 4HP.
Exchange House, Primrose Street,
London, EC2A 2HS, Receiving Agent
United Kingdom. Link Market Services Limited
The Registry,
Registrar and CREST Service Provider 34 Beckenham Road,
Link Market Services (Guernsey) Limited Beckenham, Kent BR3 4TU,
(formerly Capita Registrars (Guernsey) Limited) United Kingdom.
Mont Crevelt House,
Bulwer Avenue, Corporate Broker
St Sampson, Numis Securities Limited
Guernsey GY2 4LH. The London Stock Exchange Building,
10 Paternoster Square,
Registered Office London EC4M 7LT,
PO Box 255, Trafalgar Court, Les Banques, United Kingdom.
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.
Copyright (c) 2022 PR Newswire Association,LLC. All Rights ReservedRecent news on Third Point Investors
See all newsREG-Third Point Investors Ltd: Weekly Estimate Net Asset Value - May 2024
AnnouncementREG-Third Point Investors Ltd: Monthly Estimate Net Asset Value - April 2024
AnnouncementREG-Third Point Investors Ltd: Third Point Releases Q1 2024 Investor Letter
AnnouncementREG-Third Point Investors Ltd: Monthly Final Net Asset Value - March 2024
AnnouncementREG-Third Point Investors Ltd: Notice of Annual General Meeting
Announcement