REG-Third Point Investors: Annual Financial Report
26/04/2023 07:15
25 April 2023
Third Point Investors Limited (the "Company")
ANNUAL REPORT & AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER
2022
Third Point Investors Limited, the London-listed, multi-strategy investment
company managed by Third Point LLC (the “Investment Manager”), is pleased
to announce its full-year results for the year ended 31 December 2022.
Financial Key Points
* The Company returned -24.4% on a NAV total return basis and -25.5% on a
share price basis. This compares with a -17.7% return for the MSCI World Index
and a -18.1% return for the S&P 500 Index.
* While the discount to NAV ended the year 1.4% wider than where it began,
this should be seen in the context of a significant widening of discounts
across Investment Trust generally, which fell on average from -0.3% to -9.0%
on a market cap-weighted basis.
Operational Key Points
* During 2022, the Company bought back over 2 million shares, equivalent to
$53 million in value, which was accretive to NAV by 27 cents per share.
* In September 2022, the Board announced that it would continue its previously
announced buyback programme, allocating a further $50 million in the period to
September 2023.
* The Company also executed an innovative exchange offer for shares in the
Company during the year into the Third Point Master Fund at a discount of 2%
to NAV. The offer was fully subscribed at the limit of $75 million.
* During the year, the Board welcomed two new independent directors, Richard
Boleat and Vivien Gould, in March 2022, further augmenting the Board’s
expertise.
* During 2022, Long Equity was the largest source of detraction with -22.7%
gross contribution to return. This was offset by a positive contribution of
Short Equity generating a return of +6.5%.
* Activist positions worked well in the second half of the year. Pacific Gas &
Electric was the top YTD contributor, with the stock gaining more than 60% in
2H 2022.
* The Master Fund in which the Company invests is tilting towards more
concentrated investment exposures where its traditional strengths lie,
focussing on classic value, event driven and activism strategies. The
Investment Manager also expects that credit opportunities will present
themselves as tighter credit conditions persist.
* The Company will also hold tender offers in March 2024 and March 2027.
These tenders will each be for 25% of outstanding shares at a discount of 2%
if the discount is wider than 10% and 7.5%, respectively, in the six months
prior to the tender submission notification date.
Rupert Dorey, Chair of the Company, commented:
“While 2022 was extremely disappointing from a performance perspective, the
Investment Manager is encouraged that the opportunity set currently presented
is highly attractive for capitalising on its many strategies employed,
including security selection and specialist credit.
“It is notable that the Investment Manager’s longevity and ability to
bounce back strongly after significant drawdowns is a defining characteristic,
and we believe that the current investment landscape will offer the
opportunity to earn strong returns in the years ahead.”
Press Enquiries
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 $600 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 39-person
investment team, a robust quantitative data and analytics team, and a deep,
tenured business team. Third Point manages approximately $12.1 billion in
assets for sovereign wealth funds, endowments, foundations, corporate & public
pensions, high-net-worth individuals, and employees.
About Third Point Investors Limited
Third Point Investors Limited (“TPIL”) offers a unique access point to
Daniel Loeb’s Third Point LLC and its strong track record of delivering
returns for investors since 1995. Third Point LLC adopts an active and engaged
approach to global investing for investors wishing to diversify their
portfolios. Unconstrained in style and free of benchmark confinement, Daniel
Loeb’s investment speciality is to pivot opportunistically across asset
classes, optimizing risk-adjusted returns over the longer term.
Why Third Point Investors?
Exposure to the flagship Third Point Master Fund
As a UK-listed Company, TPIL offers UK investors a unique and efficient access
point to Third Point LLC’s flagship Master Fund, which has delivered
attractive risk-adjusted returns to investors since its inception in 1995.
Different pillars of investment strategy
The Third Point LLC (“Third Point” or the “Investment Manager”)
investment strategy centres on four distinctive pillars: activism; fundamental
and event-driven equities; credit; and private markets (ventures). CIO Daniel
Loeb is responsible for overall capital allocation across these strategies,
according to his reading of market conditions.
Unconstrained and agile
The Investment Manager opportunistically pivots across asset classes, capital
structure and geographic domicile according to where it sees good potential
risk-adjusted returns. It is not a benchmark-driven fund and therefore it
provides a differentiated approach and outcome for global investors seeking
diversification.
Constructivist engagement
Third Point aims to derive long-term value through various forms of
constructivist engagement with companies in which it invests. It also pursues
event-driven opportunities, identifying misunderstood catalysts such as M&A
and special situations that will unlock value.
Always striving to improve
The Investment Manager’s cultural philosophy values teamwork and
improvement. It respects the Japanese business concept of Gemba Kaizen, which
takes into consideration the skills of the entire organisation, with the
understanding that even the smallest of adjustments will create value over
time.
Governance
TPIL is a Guernsey-domiciled, London-listed investment company which is a
member of the Association of Investment Companies (AIC) in the UK. A majority
of independent directors on a board is an important hallmark of good UK
governance practice.
Historical Performance
As at 31 December 2022
1 Year 3 Year 5 Year 10 Year Inception Inception
Third Point Investors Ltd (NAV) -24.4% 5.0% 4.7% 7.9% 7.5% N/A
Third Point Investors Ltd (Price) -25.5% 8.3% 4.6% 8.5% 6.9% N/A
Third Point Offshore Fund Ltd (Master Fund). -21.9% 4.5% 3.4% 6.8% 7.3% 13.3%
S&P 500 Index -18.1% 7.7% 9.4% 12.6% 8.4% 8.4%
MSCI World Index -17.7% 5.5% 6.7% 9.5% 5.8% 6.9%
Annualised Historical Performance
Chairman’s Statement
Dear Shareholder,
2022 will be remembered as a year when almost all asset classes performed
poorly, suffering significant losses in most sectors. TPIL was not alone.
During 2022, TPIL returned -24.4% on a NAV total return basis and -25.5% on a
share price basis. This compares with a -17.7% return for the MSCI World Index
and -18.1% for the S&P 500 Index and -33.0% for the technology-heavy NASDAQ
Index. Over the past three years TPIL has achieved annualised share price
total returns of +8.3% (+5% NAV) versus +5.5% and +7.7% for the MSCI World and
S&P 500 indices respectively.
Rising, and more persistent, inflation together with adverse geopolitical
events have been the dominant themes during most of 2022. The hardening
resolve of central banks to use restrictive monetary policy to contain
inflation has given way to occasional market exuberance that each rise in
interest rates heralds optimism that inflation is at or near its peak. While
economic indicators generally do not yet evidence a U.S. recession, avoiding
one is looking increasingly tenuous as the U.S. Federal Reserve responds
aggressively to a robust labour market.
Portfolio Drivers
During 2022, Long Equity was the largest source of detraction with -22.7%
gross contribution to return. This was offset by a positive contribution of
Short Equity generating a return of +6.5%, netting -16.2% for all equity.
Within the Long Equity exposures, Fundamental and Event Driven equity made up
-19.6% of the -22.7%, with the -3.1% balance being attributed to Activist
positions.
The Company’s exposure to Corporate and Structured Credit performed in line
with the indices, and detracted a combined -2.5% at the portfolio level.
Pre-IPO Privates contributed a further -3.3% return at the portfolio level,
with the aggregate venture portfolio being marked down by 35% in line with the
NASDAQ.
Having entered 2022 with an above average net equity exposure of 67%, two key
factors contributed to TPIL’s underperformance in 2022. Firstly, the
Investment Manager underestimated both the impact of rising and increasingly
persistent inflation. Secondly, the contagion from earnings multiple
contraction from the unprofitable tech spread more broadly to higher quality
and other high multiple names. Over half of the fund losses for the year were
incurred in Q1 2022. In a similar vein, the stocks such as SentinelOne, Intuit
and Upstart – which had contributed to 20%+ gains in FY 2021 – were the
very same that hurt the Company most in Q1 2022, with additional drawdown
contributions from Amazon and Disney.
To put this in context, while pre- IPO and post-IPO Privates cost the Company
almost 10% in 2022, they have contributed almost 30% over the past three
years.
As the year progressed, the portfolio evolved to more of a capital
preservation mode with net equity exposure falling at its lows to around 25%,
focussing on long positions in more defensive names notably in the energy
sector, while upsizing short exposure to growth and tech-oriented sectors.
During the second half, increased focus on long equity in event and activist
themed positions,
such as Colgate-Palmolive & Bath & Body Works, were major contributors, and
were positively augmented by aggressive hedging against interest rate
exposure.
Discount Management
Despite the Board’s continued efforts to narrow the discount during the year
with the ongoing buyback programme and an exchange offer for 25% of
outstanding shares, the discount ended the year on 15.4% vs 14.1% at end 2021.
While the discount ended the year 1.4% wider than where it began, this should
be seen in the context of a significant widening of discounts in the
Investment Trust sector generally, which fell on average from -0.3% to -9.0%
on a market-cap weighted basis.
During 2022 the Company bought back over 2 million shares, equivalent to $53
million in value, which was accretive by 27 cents per share. Since 2018, when
the latest buyback programme was initiated, the Company has bought back just
under 14 million shares with a value of more than $264 million, or an
accretion of $1.69 per share. In September 2022, the Board announced that it
would continue its previously announced buyback programme, allocating a
further $50 million to buybacks in the period to September 2023. At the time
of publication, approximately $29 million was remaining of this tranche.
The Company also executed an exchange offer for shares in the Company during
the year into the Third Point Master Fund at a discount of 2% to NAV. The
offer was fully subscribed at the limit of $75 million. The Board would like
to remind shareholders that two further tenders will be held in March 2024 and
March 2027. The tenders will each be for 25% of outstanding shares at a
discount of 2% if the discount is wider than 10% and 7.5% respectively, in the
six months prior to the tender submission notification date.
Following a series of requisitions by certain shareholders in 2021 and early
2022, the Board welcomed two new independent directors in March 2022, further
augmenting its independence and capability. We are delighted to benefit from
Richard Boleat and Vivien Gould’s deep experience on the Board. They chair
the Management Engagement Committee and Remuneration & Nomination Committees,
respectively.
Following a bruising year in 2022, the Master Fund in which the Company
invests is tilting towards more concentrated investment exposures where its
traditional strengths lie, focussing on classic value, event driven and
activism strategies, characterised by catalysts within investee companies, or
where events are initiated by the Investment Manager. Activism exposure has
risen from approximately 15% to almost 40% of gross equity exposure over the
financial year.
Corporate and Structured Credit have been traditional strengths of the
Company. During the current financial year, the rising interest rate
environment has induced greater volatility in consumer-facing structured
credit, permitting a move up the capital structure where the Company can
benefit from greater credit support and higher yields as well as offering more
attractive risk adjusted returns, even under adverse scenarios. In Corporate
Credit, refinancings at higher rates and tighter credit conditions will likely
push spreads wider in what could be a period of credit dislocation, creating
attractive investment opportunities for the Company, especially in the wake of
a period of net negative supply in high yield.
While 2022 was extremely disappointing from a performance perspective, the
Investment Manager is encouraged that the opportunity set currently presented
is highly attractive for capitalising on its many strategies employed in its
security selection and in specialist credit.
It is notable that the Investment Manager’s longevity and ability to bounce
back strongly after significant drawdowns is a defining characteristic, and we
believe that the current investment landscape will offer the opportunity to
earn strong returns in the years ahead.
Rupert Dorey
25 April 2023
Portfolio
Investment Manager’s Review
Strategy Performance
As stated in the Chairman’s Statement, for the twelve months ended 31
December 2022, Third Point Investors Limited’s net asset value (“NAV”)
per share decreased by 24.4%, while the corresponding share price fell 25.5%.
This compares with the MSCI World Index and S&P 500 Index returns of -17.7%
and -18.1%, respectively. The Company’s share price return included the
effects of the discount to NAV widening slightly from -14.1% to -15.4%.
2022 looks to have been the start of a painful transition from a long period
of accommodative monetary policy to one characterised by a tighter grip. The
sustained reverberations of the pandemic, paired with the conflict in Ukraine,
conspired to push inflation to 40-year highs, precipitating a forceful
response from global central banks. Very few corners of the market were spared
from this liquidity pullback – 2022 was one of only a handful of calendar
years on record when both equities and bonds logged negative annual returns.
Hardest hit, though, was anything with duration, including longer dated fixed
income and any security promising future growth at the expense of current
profitability. Adding to the disorientation were the month-to-month
convulsions – despite being down more than 18% for the full year, the S&P
500 saw three intra-year rallies of more than 10% driven by the hope of a
“pivot” from the U.S. Federal Reserve. Each of these rallies eventually
fizzled out as the Fed reaffirmed its hawkishness.
While it was exceedingly difficult to navigate this volatility, Third
Point’s full year performance is nonetheless disappointing. Long Equity was
the largest source of detraction (-22.7% gross contribution to return for
Master Fund, Fig. 1 below), and the vast majority of these losses occurred in
Third Point’s Fundamental & Event Equity portfolio as opposed to its
activism positions. Losses in the long book were offset to a smaller degree by
Short Equity Positions (+6.5% gross contribution to return). Elsewhere, both
Corporate & Sovereign Credit and Structured Credit (-2.5% gross contribution
to return combined) were smaller sources of losses, driven by the move in both
interest rates and credit spreads in high yield and asset-backed securities.
Finally, the growth-oriented Privates portfolio (-3.3% gross contribution to
return) was marked down approximately 35% in aggregate during the year,
roughly in line with the performance of the NASDAQ index. We discuss 2022
performance in more detail below.
Note: All information is at 31/12/2022 and relates to the Third Point Offshore
Master Fund L.P. Gross returns are shown before deducting all expenses,
management fees, and incentive fees, as applicable. Please see the important
notes and disclaimers at the end of this document.
2022 Performance Review
In retrospect, the principal source of underperformance during 2022 was
entering the year with an elevated net long exposure in Equities (Fig. 2
below).
Third Point started to reduce exposures to equities in Q4 2021 when it became
clear that inflation was becoming more persistent than expected. Ultimately,
however, the firm underestimated how broadly multiple contraction would spread
from the most vulnerable ends of the market – especially hyper-growth and
unprofitable technology – to profitable technology and higher quality
(albeit higher multiple) names. As a result, about half of the Master Fund’s
losses for the full year of 2022 were experienced in Q1 2022. And the symmetry
stands out: the same names that helped Third Point deliver 20%+ returns in
2021 ended up being the largest sources of detraction, both for Q1 2022 and
for the full year (Fig. 3 below).
Most of those losses were crystallized early in the year as part of a pivot
towards a more defensive portfolio. Third Point exited Upstart in January
after having trimmed substantially in Q4 2021. Even as it represented a top Q1
2022 detractor, that investment contributed 15.6% gross to fund returns since
its inception as a Series C private investment in 2015. The Investment Manager
also exited Rivian, another recent IPO, as well as positions in more mature
technology companies such as Intuit and Amazon.
After these exits in Q1 2022, SentinelOne in many ways became the last outpost
of growth in the portfolio. Third Point believed that, especially in a world
beset by geopolitical turmoil, cybersecurity would be less prone to
governmental and corporate belt tightening. But the magnitude of multiple
compression and weakness in enterprise IT spend combined to drag the stock
further down for the balance of the year. As a result, the cybersecurity
company, the second largest contributor in 2021, was the single largest
detractor in 2022. Like Upstart, it has still been a very successful
investment since its inception as a private company, contributing 2.2% gross
to fund returns. While the Investment Manager still believes in its ultimate
trajectory, it trimmed the position and implemented a hedge basket to isolate
the idiosyncratic risk.
In the wake of this market pivot, which was exacerbated by Russia’s invasion
of Ukraine, Third Point continued to shift the portfolio into capital
preservation mode, while at the same time allocating more capital to potential
beneficiaries of inflation. The fund prioritized more defensive long
positions, in addition to sizing up its short equity book (especially in more
growth-oriented names in enterprise technology and media & internet) and
increasing its exposure to energy (Fig. 4 below).
These changes helped the Master Fund weather subsequent downdrafts during the
year, with one notable exception coming in June 2022, when fears of a looming
recession weighed on commodity prices and hurt energy stocks. As a result of
these portfolio changes, the corollary was that Third Point did not match the
market when fits of optimism materialized in the beginning of Q3 and first 10
weeks of Q4 (Fig 5 below).
Value-oriented long equity positions and Event/Activist positions worked well
in the back half of the year. Pacific Gas & Electric was the top YTD
contributor, with the stock gaining more than 60% in 2H 2022. New activist
positions in Colgate- Palmolive and Bath & Body Works both were top
contributors in Q4, as well as the Investment Manager’s merger arbitrage
position in Twitter. Shell, an activist position established in 2021, was a
beneficiary in 2022 of inflation/energy prices as well as its ability to
increase shareholder return through share repurchases.
1. All information is at 31/12/2022. Exposures are reflected as the average
exposure during each month
Figure 3: Contributors/Detractors
Top Contributors: Full Year 2021
Position
Description
Upstart
AI-enabled lending platform
SentinelOne
AI-enabled cybersecurity
Intuit
Consumer and business software
Danaher
Life science tools/diagnostics
Rivian
Electric vehicle manufacturer
Top Detractors: Q1 2022
Position
Description
SentinelOne
AI-enabled cybersecurity
Intuit
Consumer and business software
Upstart
AI-enabled lending platform
Rivian
Electric vehicle manufacturer
Richemont
luxury goods
Top Detractors: Full Year 2022
Position
Description
SentinelOne
AI-enabled cybersecurity
Intuit
Consumer and business software
Amazon
e-commerce
Rivian
Electric vehicle manufacturer
Disney Media & entertainment
Note: All information relates to the Third Point Offshore Master Fund L.P.
Reflects gross returns before deducting all expenses, management fees, and
incentive allocations, as applicable.
Note: All information is at 31/12/2022 and relates to the Third Point Offshore
Master Fund L.P.
1. Reflects net equity exposure as a percentage of NAV. Total net equity
exposure as a percentage of NAV, including portfolio hedges, was 67.2% as at
31 December 2021, 27.6% as at 30 June 2022, and 41.5% as at 31 December 2022.
The same valuation rationalization that affected Third Point’s public equity
portfolio in Q1 2022 also weighed down its privates portfolio, which is marked
to market at least quarterly referencing the attributes of each company as
well as public market comparable companies.
Figure 5: Performance Comparison (%)
2022 January S&P 500 -5.2 MSCI World -5.3 TPIL NAV -8.9 TPIL Price -12.9
February -3.0 -2.5 -3.2 5.8
March 3.7 2.8 -1.8 -2.3
April -8.7 -8.3 -1.6 -2.8
May 0.2 0.1 -1.8 -0.8
June -8.3 -8.6 -7.7 -5.4
July 9.2 8.0 -0.5 -7.5
August -4.1 -4.1 -0.2 1.7
September -9.2 -9.3 -3.1 -6.8
October 8.1 7.2 2.8 5.3
November 5.6 7.0 -0.7 -3.3
December -5.8 -4.2 -0.4 1.7
2022 2019 2020 2021 2022
% NAV Attribution Offshore (Pre-IPO) 1.0 2.7 4.2 -3.3
% NAV Attribution Offshore (Post-IPO) N/A 2.5 19.5 -6.3
% NAV Attribution Offshore (Total) 1.0 5.2 23.7 -9.6
All information relates to the Third Point Offshore Master Fund L.P. Reflects
gross returns before deducting all expenses, management fees, and incentive
allocations, as applicable. Please see the important notes and disclaimers at
the end of this document.
Pre-IPO reflects gross returns on private portfolio positions before a public
listing. Post-IPO reflects gross returns on private portfolio positions after
a public listing.
Individual detractors were led by later stage companies in enterprise
technology where valuation risk was more pronounced. In addition, the fund
experienced write-offs and markdowns in the modest exposure to crypto-related
private investments. To put these losses in context, from 2019 to 2021,
privates, represented by both pre-IPO positions and those held through a
public listing, contributed almost 30 percentage points to return (Fig. 6
above). In 2022, the Master Fund gave just under a third of that gain back.
Corporate & Sovereign Credit/ Structured Credit
In one of the worst years on record for credit markets, with the J.P. Morgan
High Yield Index returning -11% and the J.P. Morgan Investment Grade Index
returning -15%, Third Point’s Corporate Credit portfolio returned
approximately -12%, representing a -1.1% gross contribution to Master Fund
returns. While disappointing on an absolute level, the firm kept its exposures
relatively contained throughout the year, limiting the damage on Third
Point’s aggregate portfolio. The largest individual source of detraction for
the year was the firm’s position in aerospace company Boeing. The
underperformance was a combination of its longer duration and the delayed
delivery of its 737 aircraft. Investments in the bonds of cruise lines, which
bounced back alongside the spending habits of vacationers, were well timed and
offset some of these losses.
Third Point’s Structured Credit portfolio, which was evenly split between
residential mortgage-backed securities and other consumer-related asset-backed
securities, returned -5% for the full year, representing a -1.4% gross
contribution to Master Fund return. Like virtually all other markets, the
Fed’s efforts to combat inflation brought the same unease and volatility to
the structured credit markets. The portfolio’s residential mortgage-backed
exposure was most affected by this mark-to-market, led by rising rates, wider
credit spreads and a scenario shift pointing to a higher probability of
recession. Despite the increased uncertainty, homeowners and consumers have
continued to pay down the underlying loans in these asset-backed securities,
and Third Point chose to maintain an elevated allocation to the asset class
despite the headwinds it faced in 2022.
We entered 2023 with more constructive trends in geopolitics and
macroeconomics. Europe appeared to have sidestepped the worst fears related to
the Ukraine war, high energy prices, and recession, leading to strong
performance in equity markets. China accepted the course of herd immunity and
is already showing signs of strength in its reopening, leading to expectations
of significant pent-up demand for luxury goods and commodities. China seems to
understand that restoring economic strength is central to its political
ambitions, but any enthusiasm there must be tempered by realism about
geopolitical risks.
This prevailing sense of optimism was of course tempered in March by
convulsions in the banking sector, starting with several regional banks in the
U.S. and moving on to Credit Suisse. While regulators swiftly stepped in to
fortify confidence in the system, at the very least, this reckoning will
further constrict lending activity as the cost of capital continues to rise.
This will weigh on economic growth at a fragile time, but will also assist
central bankers in their efforts to dampen down inflation.
This continued push and pull between monetary policy and the real economy will
likely yield uneven results in the near term. However, the Investment
Manager’s earnings outlook for 2024 is more favourable, and it believes
conditions are now ripe for many types of eventdriven and activist investing.
The stock market decline has created attractive valuations for many high
quality companies, while Covid created aberrations in growth and a reluctance
to let go of underperforming business units or bloated cost structures. To the
extent companies have not addressed these issues themselves or have been slow
to react, engaged shareholders have an opportunity to encourage more efficient
operations and capital allocation. This opportunity is the driving force
behind the increasing exposure to activism and event-driven names in the Third
Point portfolio (Fig. 7 below). The firm used market weakness in Q4 2022 to
bring up its exposures, initiate several new positions, and add to others that
traded to attractive levels. In addition to activism, the Investment Manager
is focusing on companies making significant share repurchases, planning to
unlock value via a spin-off, or improving a muddied narrative after being born
out of bankruptcy.
Third Point’s credit portfolio remains positioned based on the fundamental
view that the consumer was (and remains) in good shape. The huge increase in
housing prices over the last few years combined with mortgage amortization
provides significant credit support to the residential mortgage market. By
contrast, corporate debt levels are high. As a result, the Investment
Manager’s structured credit exposure is at a relatively high level while its
corporate exposure is much lower. Third Point has continued to hedge most of
the interest rate risk in both credit portfolios.
Corporate credit spreads appeared tight at the start of 2023 given the
uncertain near-term outlook. The U.S. Federal Reserve may be close to
finishing rate increases, but Third Point expects increasing stresses in the
credit markets as the impact of higher interest rates cycles through the
system, something we saw most acutely in the banking sector in the first
quarter of 2023. Investment and business models predicated on cheap money are
no longer economic, and Third Point expects an increasing number of
opportunities to bubble up in public markets as this dynamic shifts. Third
Point has a history of deploying capital to credit quickly during times of
dislocation (Fig. 8 above), and for now, the firm is keeping cash available to
invest if circumstances dictate.
Meanwhile, based on the mark-to-market of 2022, the structured credit
portfolio’s current yield has risen to approximately 18%. The portfolio is
split roughly 50/50 between residential mortgage-backed securities and
consumer asset-backed securities. The largest source of detraction from
performance in 2022 was the reperforming mortgage portfolio. However it
remains one of the most compelling parts of the portfolio and represents risk
that cannot be re-created today given the historically tight financing costs
Third Point secured when structuring these securitizations in 2021. Third
Point believes this reperforming mortgage exposure, coupled with short
duration consumer ABS and senior mortgage tranches, represents a strong
potential risk-adjusted return profile with the ability to re-invest proceeds
in a higher rate environment. As such, the firm has been actively trading the
portfolio, with a focus on reducing subordinate risk and re-investing capital
into higher yielding senior exposure.
Finally, in privates, Third Point believes the latest venture market reset is
a healthy one. The opportunities being created by accelerating technological
change are large and not receding. What has begun to recalibrate is the
investing environment, and this is finally being expressed in valuations. This
dynamic presents opportunity: the firm would rather be active in a market
where enterprise software trades at 7x revenue multiples compared to 100x,
even if that change has required it to adjust marks on some portfolio
companies.
Note: All information is at 31/12/2022 and relates to the Third Point Offshore
Master Fund L.P. Exposures are reflected as the average exposure during each
month.
1. All information is at 31/12/2022 and relates to the Third Point Offshore
Master Fund L.P. Exposures are reflected as the average exposure during each
month
Figure 9: Opportunity in Volatility
Largest Historical Drawdowns
Drawdown
Statistics1
June 2008- Oct. 2021- Jan. 2020- Jan. 2018- May 2002- March 1998-
2022 March 2009 Present March 2020 Dec. 2018 Oct. 2002 Sept. 1998
Drawdown -35.5% -29.0% -17.2% -14.6% -14.3% -11.4%
Trough Date 31/03/2009 TBD 31/03/2020 31/12/2018 31/10/2002 30/09/1998
Recovery Date 2 31/03/2010 TBD 31/08/2020 31/01/2020 31/07/2003 31/01/1999
Recovery Months 3 12 TBD 5 13 9 4
1 Year After Trough 64.2% TBD 58.3% 17.0% 37.8% 34.4%
2 Years After Trough 106.6% TBD 53.9% 39.5% 79.9% 78.5%
Note: All information is at 31/12/2022. Past performance is not necessarily
indicative of future results.
1 Returns represented by Third Point Offshore Fund, Ltd.
2 Reflects the initial date when Third Point Offshore Fund, Ltd. recoups the
amount of the initial investment for each drawdown period.
3 Reflects number of months from trough of drawdown to recovery date.
Although performance for 2022 was disappointing, Third Point is encouraged by
the current backdrop for security and asset class selection. The firm is now
approaching three decades in business, and its longevity can be attributed to
its ability to use the many strategies it employs to find optimal risk/ reward
in changing markets. This quality has historically presented opportunities for
Third Point to adapt and to come back stronger after periods of tumult. In
each case during its largest drawdowns since inception, Third Point has gone
on to deliver strong returns in the one and two years after navigating through
periods of difficult performance (Fig. 9 above). The Investment Manager
remains optimistic that the current environment presents a compelling backdrop
for an eventdriven approach, which is its core competency and the foundation
upon which the firm was built.
Third Point LLC
Portfolio Analysis
* at 31 December 2022
Portfolio Detail (1) Long Exposure Short Net
Equity
Activism/Constructivism 23.5% -8.4% 15.1%
Fundamental & Event 43.9% -17.0% 26.8%
Portfolio Hedges3 0.2% -0.7% -0.5%
Total Equity 67.6% -26.1% 41.5%
Credit
Corporate & Sovereign 14.3% -0.5% 13.7%
Structured 26.5% -0.1% 26.5%
Total Credit 40.8% -0.6% 40.2%
Privates 8.3% 0.0% 8.3%
Side Pocket Privates 0.0% 0.0% 0.0%
Other2 0.0% -0.3% -0.2%
Total Portfolio 116.7% -27.0% 89.8%
Equity Portfolio Detail (1) Long Exposure Short Net
Equity Sectors
Consumer Discretionary 10.2% -4.4% 5.8%
Consumer Staples 10.6% -4.2% 6.3%
Utilities 9.0% 0.0% 9.0%
Energy 4.7% -0.4% 4.3%
Financials 9.1% -3.4% 5.7%
Healthcare 9.4% -4.0% 5.4%
Industrials & Materials 7.2% -2.6% 4.6%
Enterprise Technology 4.4% -3.1% 1.3%
Media & Internet 2.7% -3.2% -0.5%
Portfolio Hedges3 0.2% -0.7% -0.5%
Total 67.6% -26.1% 41.5%
(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 Includes currency hedges and macro investments. Rates and FX related
investments are excluded from the exposure figures.)
(3 Primarily broad-based market and equity-based hedges)
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 YSP shares.
Investment Team
Daniel S. Loeb
CEO & CIO
Daniel S. Loeb is CEO of Third Point LLC, founded in 1995. Daniel has served
on five publicly traded company boards: Ligand Pharmaceuticals; POGO Producing
Co.; Massey Energy; Yahoo!; and Sotheby’s. Daniel’s philanthropic
activities are driven by principles of individual human rights, including
fighting against inequality and discrimination and for policies that lead to
greater economic opportunity for all. Daniel graduated from Columbia
University with an A.B. in economics in 1983, endowed the Daniel S. Loeb
Scholarship for undergraduate study there, and received the school’s John
Jay Award for distinguished professional achievement. In October 2020, he was
awarded the Alexander Hamilton Award for his philanthropic service by the
Manhattan Institute.
Ian Wallace
Partner & Head of Credit
Ian Wallace joined Third Point in 2009. Prior to joining Third Point, Ian was
the Managing Member of River Run Management, LLC, which he founded in 1999.
River Run was a hedge fund focused on high yield and distressed investments
and the firm shared office space with and partnered with Third Point on many
successful distressed investments from 2000-2004. From 1989 to 1998, Ian was a
Managing Director with Oak Hill, an affiliate of the Robert M. Bass Group.
Prior to Oak Hill, Ian was a Vice President in the High-Yield Research group
at First Boston, and a staff accountant at Arthur Andersen & Co. Ian graduated
from the University of Washington with a B.A. in Business Administration.
Shalini Sriram
Managing Director & Head of Structured Credit
Shalini Sriram is the Head of Structured Credit at Third Point and sits on the
firm’s risk committee, overseeing a range of investments from residential
and commercial mortgage backed securities to the intersection of consumer
finance and technology. Prior to joining Third Point in 2017, Shalini invested
in structured credit at Scoggin Capital. From 2006 to 2012, Shalini was an
Executive Director at Morgan Stanley, and Head of ABS CDO and RMBS trading.
From 2002 to 2006, Shalini was an associate at Banc of America Securities on a
proprietary ABS trading desk where she first structured and then traded CDOs.
Shalini received a B.A. in Economics cum laude in three years from Wellesley
College and an MBA from Columbia Business School.
Governance
Directors
Rupert Dorey (Chairman)
Rupert is a Guernsey resident and has over 35 years of experience in financial
markets. Rupert 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. He has served on boards with 18 different managers, including
Apollo, Aviva, Cinven, CQS, M&G, Partners Group.
Directorships in other public listed companies:
NB Global Monthly Income Fund Limited (London Stock Exchange).
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 also acts as chairman of CVC Credit Partners
European Opportunities Limited and audit committee chairman of M&G Credit
Income Investment Trust plc, both 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.
Directorships in other public listed companies:
CVC Credit Partners European Opportunities Limited, M&G Credit Income
Investment Trust plc (both London Stock Exchange).
Huw Evans
Huw Evans 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 acted as a
professional non-executive Director of a number of Guernsey-based companies
and funds and is currently chair of VinaCapital Vietnam Opportunity Fund
Limited. He holds an MA in Biochemistry from Cambridge University. He moved
back to the UK in 2023 and is now UK resident.
Directorships in other public listed companies:
VinaCapital Vietnam Opportunity Fund Limited (London Stock Exchange).
Vivien Gould
Vivien Gould is a UK resident and the Senior Independent Director at The
Lindsell Train Investment Trust PLC and a non-executive director of Barings
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.
Directorships in other public listed companies:
The Lindsell Train Investment Trust PLC, Barings Emerging EMEA Opportunities
PLC, Schroder AsiaPacific Fund plc (all London Stock Exchange).
Joshua L. Targoff
Joshua L. Targoff is a US resident and has been the Chief Operating Officer of
the Investment Manager since May 2009. He joined as General Counsel in May
2008. Previously, Joshua was the General Counsel of the Investment Banking
Division of Jefferies & Co. Joshua spent seven years doing M & A transactional
work at Debevoise & Plimpton LLP. Joshua graduated with a J.D. from Yale Law
School, and holds a B.A. from Brown University. In 2012, Joshua was made a
Partner of the Investment Manager.
Claire Whittet
Claire is a Guernsey resident with over 40 years’ experience in banking and
finance. She started her career with Bank of Scotland in lending and corporate
finance and on moving to Guernsey joined Bank of Bermuda becoming Global Head
of Private Client Credit. In 2003, she joined Rothschild and Company Bank
International as Director of Lending and was latterly Managing Director and
Co-Head before becoming a Non- Executive Director in 2016. She is an
experienced Non-Executive Director of listed and PE funds.
Directorships in other public listed companies: BH Macro Limited, Riverstone
Energy Limited, TwentyFour Select Monthly Income Fund Limited (all London
Stock Exchange), Eurocastle Investment Limited (Euronext).
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.
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 2022 (“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 Ordinary 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 Ordinary 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”).
Third Point Offshore Independent Voting Company Limited
At the time of its listing, the Company adopted a share structure which was
common at that time, to mitigate the risk of the Company losing its status as
a “foreign private issuer” under US securities laws.
The Company has two classes of shares in issue: (i) Ordinary Shares which have
economic and voting rights and (ii) Class B Shares which have only voting
rights. The Company’s articles of incorporation provide that the number of
Class B Shares in issue shall be equal to 40 per cent. of the aggregate number
of Ordinary Shares and Class B Shares in issue. Consequently, holders of
Ordinary Shares can exercise 60 per cent. and holders of Class B Shares can
exercise 40 per cent. of the voting power at general meetings of the Company.
The Class B Shares are held by Third Point Offshore Independent Voting Company
Limited (“Voteco”). VoteCo has its own Board of Directors and is
completely independent of the Company and Third Point. The Board of VoteCo is
governed by VoteCo’s Memorandum and Articles of Incorporation which provide
that the votes attaching to the Class B Shares shall be exercised after taking
into consideration the best interests of the Company’s shareholders as a
whole.
VoteCo is specifically excluded from voting from any of the twelve Listing
Rules Specified Matters, being those matters in relation to which the Listing
Rules require a resolution to be passed only by holders of listed shares, the
most notable of which are:
· any proposal to make a material change to the investment policy
· any proposal to approve the entry into a related party
transaction
· the annual re-election of any non-independent director
At the time of the Company’s listing, it entered into a Support and Custody
Agreement with VoteCo under which VoteCo agreed to hold the Class B Shares as
custodian for the Ordinary Shareholders and the Company agreed to reimburse
VoteCo for its running expenses.
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
Third Point LLC (the “Investment Manager”, “Manager”, or “Firm”).
All of the Company’s capital (net of short term working capital
requirements) is invested 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.
At the beginning of the year, the Company had substantially all of its holding
in the Master Fund in share Class Y. This share class attracted a management
fee of 1.50% and the Company also qualified for an additional reduction in the
management fee applicable to it 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. The Class Y share class is subject to a 25% quarterly
investor level redemption gate. With effect from 1 January 2022, the Company
elected to participate in side pocket investments within the Master Fund and,
from that date, the Class Y shares held by the Company were designated as
Class YSP shares.
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. 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.
In 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
was designed to reduce the discount to net asset value, contain discount
volatility and provide liquidity to the market. Meanwhile, the Company’s
returns are bolstered by the accretion to NAV from buybacks. The buyback
programme was extended in September 2022 with the order of a further $50
million allocated to buybacks in the subsequent 12 months.
In the year from 1 January 2022 to 31 December 2022, the total number of
shares which were bought back was 2,331,574, with an approximate value of $53
million. The average discount at which purchases were made was 12.6%. The
buybacks effected during the year led to an accretion to NAV per share of 27
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. The KPI’s which
have been identified by the Board for determining the progress of the Company
are:
· 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 2025. 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 to the Investment Manager
serving notice under the Management Agreement. To mitigate against this risk,
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 2025.
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, 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 for the period
through 30 June 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:
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 period 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.
The interests of the Company’s employees. The Company does not have any employees.
The need to foster the Company’s business relationships with suppliers, customers and others. The Board’s approach is described under “Stakeholders” below.
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.
The desirability of the Company maintaining a reputation for high standards of business conduct. The Board’s approach is described under “Culture and Values” below.
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.
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, seeking 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 in the Director’s Report 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.
During 2021, a minority of the Company’s Shareholders petitioned the Board in an attempt to have the Board 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 close 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.
Environmental, Social and Governance (“ESG”) Policies
The Board regards proper and effective governance a high priority for the
Company. As an investment company, the Company has a limited direct impact on
the environment or on society. The Board has concluded specifically that
climate change, including physical and transition risks, does not have a
material impact on the recognition and separate measurement considerations of
the assets and liabilities of the Company in the financial statements as at 31
December 2022, but recognises that climate change may have an effect on the
investments held in the Master Fund. The Board requires the Company’s
service providers to have adopted and to follow appropriate ESG policies and
the Investment Manager assesses and monitors any climate change risk on the
investments held in the Master Fund.
The ESG policies of the Investment Manager are 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 Director of Research 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:
* 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.
* 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 within 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 Investment Manager believes 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 underrepresented 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” programme, the Investment Manager offers
its employees multiple opportunities to come together for service learning and
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.
Signed on behalf of the Board by:
Rupert Dorey
Chairman
Huw Evans
Director
25 April 2023
Directors’ Report
Directors
The Directors of the Company during the year and to the date of this Report
are as listed on pages 22 and 23 of this Annual Report.
Directors’ Interests
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 2022. Huw Evans held 5,000 shares as at 31 December 2022.
Mr. Targoff holds the position of Chief Operating Officer, Chief Legal Officer
and Partner of Third Point LLC.
Claire Whittet and her husband Martin Whittet held 2,500 shares as at 31
December 2022 through their joint Retirement Annuity Trust Scheme (RATS).
Mr. Boléat and Ms. Gould were appointed to the Board effective 1 March 2022.
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 has determined that reporting against 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 period are listed below. Ms. Whittet is
the Senior Independent Director.
Name Position Independent Date Appointed
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, Chief Legal Officer 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.
Meeting Attendance Records
The table below lists Directors’ attendance at meetings during the period.
Name Scheduled Board Meetings Attended Audit Committee Meetings Attended
Richard Boléat 3 of 41 2 of 3
Rupert Dorey 4 of 4 n/a
Huw Evans 4 of 4 3 of 3
Vivien Gould 3 of 41 3 of 3
Joshua L Targoff 4 of 4 n/a
Claire Whittet 4 of 4 3 of 3
1 Mr. Boléat and Ms. Gould were appointed to the Board effective 1 March
2022.
A number of other ad hoc meetings of the Board were held during the year which
were attended by those Directors who were available at the time.
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 and, when determining
remuneration levels of the Directors, takes into account market practice, peer
group statistics and the requirements of the role. Vivien Gould is Chairman of
the Nomination and Remuneration Committee.
Before the commencement of any recruitment process, the Nomination and
Remuneration Committee evaluate the balance of skills, knowledge, experience
and diversity on the Board and, in the light of this evaluation, prepare a
description of the role and capabilities required for a particular
appointment. Appointments to the Board will continue to be based on the
individual’s skills, experience and character, and will always be based on
merit. New Directors receive an induction from the Investment Manager on
joining the Board, and all Directors undertake relevant training as necessary.
The Company annually reviews its policy on the structure, size and composition
of the Board. The Board is cognizant of the recommendations of the Parker
Review in relation to targets for ethnic diversity, the FTSE Women Leaders
Review in relation to targets for women on boards and the new FCA Listing
Rules requirements on board diversity targets. At 31 December 2022 independent
members of the Board comprised three men and two women.
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). The 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. Richard Boléat is Chairman of the Management Engagement
Committee.
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, and the
Interim Report and unaudited condensed interim financial statements to the
Board of Directors. Huw Evans is Chairman of the Audit Committee.
Senior Independent Director
Claire Whittet is the Senior Independent Director.
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
acts as Administrator (the “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 Northern Trust International Fund Administration Services
(Guernsey) Limited (“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
seeks to ensure 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; and
· 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 Chair 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
Chair of the Board is evaluated annually by the other independent Directors
and relayed to the Chair of the Board by Claire Whittet who is the Senior
Independent Director. An external evaluation of the Board’s performance was
carried out by Lintstock Limited in February 2021. Lintstock 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 have acknowledged they 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 NAV and
maintains regular contact with the Investment Manager and Corporate Broker to
assess the market for the Company’s shares. In addition, the Investment
Manager, Corporate Broker and the Directors maintain regular contact with
significant Shareholders in the Company. The Board approved a three-year
programme in September 2019 under which the Company bought back approximately
$200 million worth of its stock with the intention of narrowing the discount.
This was broadly effective, provided liquidity to the market and contained
discount volatility over the three year period. The programme was extended in
September 2022 with of the order of a further $50 million allocated for the
subsequent 12 months;
· Concentration of the Investor Base. During 2021 a minority of
Shareholders petitioned the Board in an attempt to have the board follow
policies which were in those Shareholders’ interests. Those shareholders
agreed to withdraw their most recent requisition in February 2022 at the time
the Company appointed two further Directors to the Board. The Directors
receive quarterly reports on the shareholder base from the Corporate Broker
and there is regular communication between the Directors and the Corporate
Broker to identify any significant changes in the share register;
· 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 investor relations personnel have continued its policy of active
engagement with shareholders over the year;
· Performance of the Investment Manager. Through the Management
Engagement Committee, the Directors review the performance of the Investment
Manager on an annual basis. Daniel Loeb is CEO and CIO of the Investment
Manager and his continuing involvement is a critical element of its success.
The Board representatives conduct annual visits to the Investment Manager in
New York, the most recent being in April 2023;
· Underlying investment performance of the Master Fund. The
Directors receive monthly updates from the Investment Manager on the
performance of the Master Fund and review the detailed performance at
quarterly Board Meetings. The Board has access to the Investment Manager at
all times on any potential question or issue;
· Geopolitical and economic risk. During the year under review,
inflation emerged as a significant risk in developed economies coinciding with
moves by Central Banks to tighten monetary policy. This was overlaid with
uncertainties arising from the conflict in Ukraine leading to significant
volatility in investment markets. The Investment Manager monitors local and
international risks and adjusts the portfolio of investments in the Master
Fund accordingly;
· 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; and
· 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.
It is expected that the principal risks and uncertainties listed above will
apply to the Company for a minimum of the next six months.
Significant Events
A small group of shareholders started a campaign against the Board during 2021
which continued into the early part of 2022. 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
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
from 18 February 2022.
On 28 April 2022 the Company announced that 2,672,838 TPIL Shares had been
exchanged into Master Fund shares under the $75 million Exchange Facility
announced on 11 January 2022.
On 12 September 2022, the Company announced an extension to its buyback
programme allocating of the order of $50 million to buying shares over the
subsequent 12 months. During the year ended 31 December 2022, a total of
almost 2.3 million shares were repurchased under the buyback programme with a
value of approximately $53 million, at a weighted average discount to NAV of
12.6%.This had the effect of accreting 27 cents per share to NAV.
There were no other events outside the ordinary course of business which, in
the opinion of the Directors, may have had an impact on the Audited Financial
Statements for the year ended 31 December 2022.
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 fifteenth Annual General
Meeting was held on 8 June 2022 with all proposed resolutions being passed by
the Shareholders.
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 20 April 2023, the Company had been notified that the following had
significant shareholdings in excess of 5% in the Company:
Name Total Shares Held % Holdings in Class
Goldman Sachs Securities (Nominees) 5,160,266 19.03%
Chase Nominees Limited 3,045,032 11.23%
Vidacos Nominees Limited 2,530,268 9.33%
BBHISL Nominees Limited 1,710,050 6.31%
Aurora Nominees Limited 1,574,761 5.81%
Smith & Williamson Nominees Limited 1,367,092 5.04%
Signed on behalf of the Board by:
Rupert Dorey
Huw Evans
25 April 2023
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:
a) 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
b) 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
Huw Evans
25 April 2023
Directors’ Remuneration Report
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. As Mr Rupert Dorey was
appointed Chairman of the Board with effect from 18 February 2022, he stood
down from the Chair of the Nomination and Remuneration Committee. This role
was held briefly by Ms Claire Whittet before passing to Ms Vivien Gould on 1
May 2022.
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
reelection, 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 2022 were as follows; 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 Senior Independent Director, 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 2022 and 2021, were as follows:
2022 2021
£ £
Steve Bates1 – 66,323
Richard Boléat (Management Engagement Committee Chairman)2 42,500 –
Rupert Dorey (Chairman)3 76,000 43,616
Huw Evans (Audit Committee Chairman) 57,000 50,000
Vivien Gould (Nomination and Remuneration Committee Chairman)2 42,500 –
Joshua L Targoff4 – –
Claire Whittet (Senior Independent Director) 51,000 43,074
Total 269,000 203,013
USD equivalent US$331,634 US$280,566
1 Mr. Bates resigned from the Board with effect 22 December 2021.
2 Mr. Boléat and Ms. Gould were appointed to the Board as independent
non-executive directors effective 1 March 2022. 3 Mr. Dorey was appointed as
Chairman on 18th February 2022.
3 Mr. Dorey was appointed as Chairman on 18 February 2022. It was agreed by
the Board that as Mr Dorey had been Acting Chairman following Mr. Bates1
resignation, that Mr. Dorey be duly recompensed.
4 As a non-independent Director and as a Partner of the Investment Manager
Joshua L Targoff waived his Directors’ fee.
Performance
The financial highlights detailed on page 5 detail the share price returns
over the year.
Signed on behalf of the Board by:
Rupert Dorey
Huw Evans
25 April 2023
Report of the Audit Committee
On the following pages, we present the Audit Committee (the “Audit
Committee”) Report for the year ended 31 December 2022, 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 Richard Boléat, Vivien Gould and Claire Whittet. 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 Committee is set out below..
Date of Appointment
Name of Audit Committee Member to Audit Committee Next Date for Review
Richard Boléat 1 March 2022 March 2025
Huw Evans 28 August 2019 August 2025
Vivien Gould 1 March 2022 March 2025
Claire Whittet 27 April 2017 April 2026
The Audit Committee conducts formal meetings at least three times a year. The
table on page 33 sets out the number of Audit Committee meetings held during
the year ended 31 December 2022 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, in respect of the annual
accounts, 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 Company and its 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 2022.
Ernst & Young LLP also provided tax compliance services. 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 2022 is reasonable. The
Financial Statements of the Master Fund and the Master Partnership for the
year ended 31 December 2022 were audited by Ernst & Young LLP in the US who
issued an unmodified audit opinion dated 17 March 2023.
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 2022
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 table below summarises the remuneration payable by the Company to Ernst &
Young LLP during the years ended 31 December 2022 and 31 December 2021.
2022 £ Total 2021 £ Total
Audit Services 85,000 75,000
Non-audit Services – interim review and tax compliance services* 57,316 54,575
* Non-audit services in 2022 includes a £7,316 tax compliance fee (2021
£7,000) 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 2021 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 listed on page 42, 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 five years. 2022 is 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 2023
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 2022 which comprise the
Statement of Assets and Liabilities, 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 2022 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, including the UK
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 2024 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, repayment of the loan 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 2024.
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
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.
Climate change
The Company has explained in the “Section 172 Report” of their annual
report climate-related risks and this forms part of the “Other
information,” rather than the audited financial statements. Our procedures
on these disclosures therefore consisted solely of considering whether they
are materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appear to be materially
misstated.
Our audit effort in considering climate change was focused on the adequacy of
the Company’s disclosures in the financial statements as set out in Note 3
and the conclusion that there was not a material impact on the recognition and
separate measurement considerations of the assets and liabilities of the
Company as at 31 December 2022.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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.
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$13.5million (2021:
US$21.1million), which is approximately 2% (2021: 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% (2021: 75%) of our planning materiality, namely US$10.2m
(2021: US$15.9m). 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$0.68m (2021: S$1.1m), which is
set at 5% (2021: 5%) of planning 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
set out on pages 1 to 44, 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:
· proper 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
set out on page 26;
· Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the period is appropriate
set out on page 25;
· Director’s statement on whether it has a reasonable expectation
that the Company will be able to continue in operation and meets its
liabilities set out on page 26;
· Directors’ statement on fair, balanced and understandable set out
on page 38;
· Board’s confirmation that it has carried out a robust assessment of
the emerging and principal risks set out on pages 35 to 36;
· The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems set out on page
35; and;
· The section describing the work of the audit committee set out on
pages 41 to 42.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out
on page 38, 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:
· Financial Conduct Authority (“FCA”) Listing Rules
· Disclosure Guidance and Transparency Rules (“DTR”) of the FCA
· The UK Corporate Governance Code
· The 2019 AIC Code of Corporate Governance
· The Companies (Guernsey) Law, 2008
· We understood how the Company is complying with those frameworks by:
· Discussing the processes and procedures used by the Directors, the
Investment Manager, the Company Secretary
· and Administrator to ensure compliance with the relevant frameworks;
· Reviewing internal reports that evidenced quarterly compliance
testing; and
· 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:
· 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;
· Inspecting the relevant policies, processes and procedures to further
our understanding;
· Enquiring of the Company’s nominated Compliance Officer;
· Reviewing internal compliance reporting, Board and Audit Committee
minutes;
· Inspecting correspondence with regulators; and
· 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. We signed an initial
engagement letter on 12 November 2007.
· The period of total uninterrupted engagement including previous
renewals and reappointments is sixteen years, covering the years ending 31
December 2007 to 31 December 2022.
· 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
25 April 2023
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 Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Financial statements
Statement of Assets and Liabilities
As at 31 December
(Stated in United States Dollars) 2022 US$ 2021 US$
Assets
Investment in Third Point Offshore Fund, Ltd at fair value (Cost: US$425,367,214; 31 December 2021: US$462,831,750) 822,440,287 1,201,798,462
Cash and cash equivalents 64,597 465,592
Due from broker 11,944 11,766
Redemption receivable 6,121,484 4,776,165
Other assets 79,388 13,144
Total assets 828,717,700 1,207,065,129
Liabilities
Accrued expenses and other liabilities 344,792 600,779
Loan facility (Note 4) 149,425,845 148,563,430
Loan interest payable 2,101,177 655,012
Administration fee payable (Note 5) 3,007 3,386
Total liabilities 151,874,821 149,822,607
Net assets 676,842,879 1,057,242,522
Number of Ordinary Shares in issue (Note 7)
US Dollar Shares 27,666,789 32,658,497
Net asset value per Ordinary Share (Notes 9 and 12)
US Dollar Shares $24.46 $32.37
Number of Ordinary B Shares in issue (Note 7)
US Dollar Shares 18,444,523 21,772,330
The financial statements on pages 54 to 66 were approved by the Board of
Directors on 25 April 2023 and signed on its behalf by:
Rupert Dorey
Chairman
Huw Evans
Director
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund Ltd. and Third Point Offshore Master Fund L.P.
Statement of Operations
For the year ended 31 December
(Stated in United States Dollars) 2022 US$ 2021 US$
Realised and unrealised (loss)/gain from investment transactions allocated from Master Fund
Net realised gain from securities, derivative contracts and foreign currency translations 58,236,092 261,882,322
Net change in unrealised (loss)/gain on securities, derivative contracts and foreign currency translations (326,475,586) (2,924,913)
Net gain/(loss) from currencies allocated from Master Fund 3,118,956 (40,560)
Total net realised and unrealised (loss)/gain from investment transactions allocated from Master Fund (265,120,538) 258,916,849
Net investment gain/(loss) allocated from Master Fund
Interest income 38,342,786 20,805,290
Dividends, net of withholding taxes of US$1,102,843; (31 December 2021: US$2,369,507) 2,572,298 3,005,047
Other income 995,033 27,594
Incentive allocation (Note 2) – (52,989,103)
Stock borrow fees (841,041) (1,781,716)
Investment Management fee (10,295,508) (13,327,304)
Dividends on securities sold, not yet purchased (2,322,396) (6,131,553)
Interest expense (5,090,386) (2,023,056)
Other expenses (2,891,319) (3,387,734)
Total net investment gain/(loss) allocated from Master Fund 20,469,467 (55,802,535)
Company expenses
Administration fee (Note 5) (138,382) (94,282)
Directors’ fees (Note 6) (331,634) (143,285)
Other fees (1,129,755) (1,105,026)
Loan interest expense (Note 4) (7,328,928) –
Expenses paid on behalf of Third Point Offshore Independent Voting Company Limited1 (Note 4) (83,087) (56,433)
Total Company expenses (9,011,786) (4,089,492)
Net gain/(loss) 11,457,681 (59,892,027)
Net (decrease)/increase in net assets resulting from operations (253,662,857) 199,024,822
(1) Third Point Offshore Independent Voting Company Limited consists of
Director Fees, Audit Fee and General Expenses.
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund Ltd. and Third Point Offshore Master Fund L.P.
Statement of Changes in Net Assets
For the year ended 31 December
(Stated in United States Dollars) 2022 US$ 2021 US$
(Decrease)/increase in net assets resulting from operations
Net realised gain from securities, commodities, derivative contracts and foreign currency translations allocated from Master Fund 58,236,092 261,882,322
Net change in unrealised (loss)/gain on securities, derivative contracts and foreign currency translations allocated from Master Fund (326,475,586) (2,924,913)
Net gain/(loss) from currencies allocated from Master Fund 3,118,956 (40,560)
Total net investment gain/(loss) allocated from Master Fund 20,469,467 (55,802,535)
Total Company expenses (9,011,786) (4,809,492)
Net (decrease)/increase in net assets resulting from operations (253,662,857) 199,024,822
Increase in net assets resulting from capital share transactions
Share redemptions (Note 7) (126,736,786) (81,789,424)
Net assets at the beginning of the period 1,057,242,522 940,007,124
Net assets at the end of the period 676,842,879 1,057,242,522
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund Ltd. and Third Point Offshore Master Fund L.P.
Statement of Cash Flows
For the year ended 31 December
(Stated in United States Dollars) 2022 US$ 2021 US$
Cash flows from operating activities
Operating expenses (1,452,090) (2,016,335)
Interest paid (5,020,348) (185,685)
Directors’ fees (331,634) (280,566)
Administration fee (138,761) (194,298)
Third Point Offshore Independent Voting Company Limited (1) (83,087) (115,481)
Change in investment in the Master Fund 6,624,925 (145,056,105)
Cash outflow from operating activities (400,995) (147,848,470)
Cash Flows from financing activities
Credit facility - 150,000,000
Payment of loan costs - (1,724,829)
Cash inflow from financing activities - 148,275,171
Net (decrease)/increase in cash (400,995) 426,701
Cash and cash equivalents at the beginning of the period 465,592 38,891
Cash and cash equivalents at the end of the period 64,597 465,592
(1) Third Point Offshore Independent Voting Company Limited consists of
Director Fees, Audit Fee and General Expenses.
(Stated in United States Dollars) 2022 US$ 2021 US$
Supplemental disclosure of non-cash transactions from:
Operating activities
Redemption of Company Shares from Master Fund (Note 7) 126,736,786 81,789,424
Financing activities
Share redemptions (Note 7) (126,736,786) (81,789,424)
Amortisation of loan cost 862,415 288,259
See accompanying notes and 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 2022
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.
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 is a limited partner of , and invests all of its investable
capital in, Third Point Offshore Master Fund L.P. (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 2022, 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. Under the Investment Management Agreement, had the
NAV of the Master Fund increased over the year, the Investment Manager would
also have been entitled to 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 YSP 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 YSP 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 YSP 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$nil (31 December 2021: US$ 52,989,103) of
incentive fees at the Master Fund level for the year ended 31 December 2022.
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
at 31 December 2022. 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 2022.
Valuation of Investments
The Company records its investment in the Master Fund at fair value. The Board
has concluded specifically that climate change, including physical and
transition risks, does not have a material impact on the recognition and
separate measurement considerations of the assets and liabilities of the
Company in the financial statements as at 31 December 2022, but recognises
that climate change may have an effect on the investments held in the Master
Fund. Fair values are generally determined utilising the net asset value
(“NAV”) provided by, or on behalf of, the underlying Investment Manager of
the 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. During the
year, the Company owned Class YSP shares of the Master Fund. During the year,
the Company recorded non-cash redemptions of US$125,882,030 (348,786 shares)
for the cancellation of the Company shares under the share buyback programme
and the Exchange Facility and redeemed US$8,825,000 (25,860 shares) to pay
Company expenses.
The following schedule details the movements in the Company’s holdings in
the Master Fund over the year. With effect from 1 January 2022, the Company
elected to participate in side-pocket investments within the Master Fund and,
from that date, the Class Y shares held by the Company were designated as
Class YSP shares.
Shares held at 1 January Shares Rolled Shares Transferred Shares Transferred Shares Shares Shares held at 31 December Net Asset Value Per Share at 31 December Net Asset
2022 Up In Out* Issued Redeemed 2022 2022** 2022
Class YSP – 1.25, 490,000 — — — — — 490,000 78.34 38,386,055
Class YSP – 1.25, 2,275,763 — — (198,164) — — 2,077,599 330.29 686,213,574
Class YSP – 1.25, 22,699 — — — — — 22,699 330.07 7,492,378
Class YSP – 1.25, 451 — — — — — 451 328.07 148,094
Class YSP – 1.25, 441,000 — — — — — 441,000 75.01 33,078,705
Class YSP – 1.25, 450,000 — — — — — 450,000 71.33 32,096,954
Class YSP – 1.25, 49,000 — — — — — 49,000 75.01 3,675,412
Class YSP – 1.25, 230,392 — — — — (176,552) 53,840 330.29 17,782,785
Class YSP – 1.25, 50,000 — — — — — 50,000 71.33 3,566,328
Total 822,440,287
* All shares transferred out during the year were exchanged into the Master
Fund per the exchange facility discussed in Note 11. ** Rounded to two decimal
places.
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 2022, the Company’s US Dollar shares represented 15.6% (31 December
2021: 14.74%) 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 unrealized 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 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, 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 for the period
through 30 June 2024.
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 2022 have been assessed and
do not have an impact on the Audited Financial Statements.
Credit 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 principal,
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. Credit Facility
On 1 September 2021, the Company entered into an agreement for a credit
facility with JPMorgan Chase Bank, N.A., to employ gearing within the Company.
The credit facility allows 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 by 31 December 2021 and
the proceeds were invested in shares in the Master Fund. 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 US$375,000 as a
structuring fee and paid other loan related costs, such as legal costs, of
US$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 facility.
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$138,382 (31
December 2021: US$194,267) with US$3,007 outstanding (31 December 2021:
US$3,386) at the year-end.
VoteCo
The Company has entered into a support and custody agreement with Third Point
Offshore Independent Voting Company Limited (“VoteCo”) whereby, in return
for the 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 on page 55
and amounted to US$83,087 (31 December 2021: US$115,481). As at 31 December
2022 expenses accrued by the Company on behalf of VoteCo amounted to US$11,728
(31 December 2021: US$23,525).
6. Directors’ Fees
At the AGM in July 2020 Shareholders approved an annual fee cap for the
directors as a whole of £500,000.
The Directors’ fees during the year amounted to £269,000 (31 December 2021:
£203,013) with £nil outstanding (31 December 2021: £nil) at the year-end.
The current fee rates for the individual Directors are as follows;
Name Fee per annum
Chairman £76,000
Audit Committee Chairman £57,000
Director £48,000
Senior Independent Director £3,000
Chairman of the Management Engagement Committee £3,000
Chairman of the Nomination and Remuneration Committee £3,000
The Directors are also entitled to be reimbursed for expenses properly
incurred in the performance of their duties as Director.
7. Stated Capital
The Company was incorporated with the authority to issue an unlimited number
of Ordinary Shares (the “Shares”) with no par value and an unlimited
number of Ordinary B Shares (“B Shares”) of no par value.
Number of Ordinary Shares Notes US Dollar Shares
Shares issued 1 January 2022 32,658,497
Shares Cancelled
Shares cancelled for exchange into the Master Fund 11 (2,672,838)
Shares cancelled during the year (2,318,870)
Total shares cancelled during the year (4,991,708)
Shares in issue at end of the year 27,666,789
US Dollar Shares
Notes US$
Net assets at the beginning of the year 1,057,242,522
Shares Cancelled
Share value exchanged into the Master Fund 11 (73,499,912)
Share value cancelled during the year (53,236,873)
Total share value cancelled during the year (126,736,785)
Net (decrease) in net assets resulting from operations (253,662,857)
Net assets at end of the year 676,842,879
Number of Ordinary B Shares Notes US Dollar Shares
Shares in issue as at 1 January 2022 21,772,330
Shares Cancelled
Shares cancelled for exchange into the Master Fund 11 (1,781,892)
Shares cancelled during the year (1,545,912)
Total shares cancelled during the year (3,327,804)
Shares in issue at end of the year 18,444,526
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. (null) FBO1
In September, 2019, it was announced that the Company, again through the
Master Fund, would 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. The buy back programme was extended in September 2022
when a further $50 million was allocated to buying back shares over the
subsequent 12 months. Any shares traded mid-month are purchased and held by
the Master Partnership until the Company is able to cancel the shares
following each month-end. As at 31 December 2022, the Master Partnership held
170,120 shares of the Company – these shares were subsequently cancelled in
January 2023.
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 2022, other investment funds owned by or affiliated with the
Investment Manager owned 5,705,443 (31 December 2021: 5,705,443) US Dollar
Shares in the Company. Refer to note 5 and note 6 for additional Related Party
Transaction disclosures.
11. Significant Events
A small group of shareholders started a campaign against the Board during 2021
which continued into the early part of 2022. 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
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 28 April 2022 the Company announced that 2,672,838 TPIL Shares had been
exchanged into Master Fund shares under the $75 million Exchange Facility
announced on 11 January 2022.
On 12 September 2022, the Company announced an extension to its buyback
programme allocating of the order of $50 million to buying shares over the
subsequent 12 months.
In the year to 31 December 2022, almost 2.3 million shares were repurchased
under the buyback programme with a value of approximately $53 million, at a
weighted average discount to NAV of 12.6%. This had the effect of accreting 27
cents per share to NAV.
There were no other events during the financial year outside the ordinary
course of business which, in the opinion 0f the Directors, may have had an
impact on the Audited Financial Statements for the year ended 31 December
2022.
12. Financial Highlights
The following tables include selected data for a single Ordinary Share in
issue at the year-end and other performance information derived from the
Audited Financial Statements.
US Dollar Shares 31 December 2022 US$
Per Share Operating Performance
Net Asset Value beginning of the year 32.37
Income from Operations
Net realised and unrealised loss from investment transactions allocated from Master Fund (7.88)
Net loss (0.30)
Total Return from Operations (8.18)
Share buyback accretion 0.27
Net Asset Value, end of the year 24.46
Total return before incentive fee allocated from Master Fund (24.44%)
Total return after incentive fee allocated from Master Fund (24.44%)
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 2022 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$
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 2022 US$
Supplemental data
Net Asset Value, end of the year 676,842,879
Average Net Asset Value, for the year (1) 793,974,457
Ratio to average net assets
Operating expenses (2) (3.84%)
Incentive fee allocated from Master Fund
Total operating expense (2) (3.84%)
Net gain (3) 1.44%
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.
3 Net gain (or loss) is taken from the Statement of Operations and is the net
investment gain / (loss) for the year allocated from the Master Fund less the
Company expenses over the average net asst value for the year.
US Dollar Shares 31 December 2021 US$
Supplemental data
Net Asset Value, end of the period 1,057,242,522
Average Net Asset Value, for the period (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) (8.07%)
Net loss (5.74%)
1 Average Net Asset Value for the period is calculated based on published
monthly estimates of NAV.
2 Operating expenses are Company expenses together with operating expenses
allocated from the Master Fund.
3 Net gain (or loss) is taken from the Statement of Operations and is the net
investment gain / (loss) for the year allocated from the Master Fund less the
Company expenses over the average net asset value for the year.
13. Ongoing Charge Calculation
Ongoing charges for the year ended 31 December 2022 and 31 December 2021 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 2022 and 31 December 2021 excluding
performance fees and including performance fees are based on Company expenses
and allocated Master Fund expenses outlined below.
(excluding performance fees) 31 December 2022 31 December 2021
US Dollar Shares 1.98% 1.91%
(including performance fees) 31 December 2022 31 December 2021
US Dollar Shares 1.98% 6.99%
14. Subsequent Events
As at 31 December 2022, the Master Partnership held 170,120 shares of the
Company – these shares were subsequently cancelled in January 2023.
The Directors confirm that, up to the date of approval, which is 25 April
2023, when these 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.
Investor Information
Financial Calendar
Year end 31 December.
Annual results announced and Annual Report published in April. Annual General
Meeting held in June.
Interim results announced in September.
Website
Further information about Third Point Investors Limited, including share price
and NAV performance, monthly reports and quarterly investor letters, is
available on the Company’s website: www.thirdpointlimited.com.
How to invest
Information is available on The Association of Investment Companies website,
where a list of platform providers can be found:
www.theaic.co.uk/availability-on-platforms.
Management and Administration
Directors
Rupert Dorey (Chairman)*(1)
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Richard Boléat*(2)
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Huw Evans*
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Vivien Gould*(2)
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Joshua L Targoff
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Claire Whittet*
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
* These Directors are independent.
(1) Mr. Rupert Dorey was appointed Chairman of the Board with effect 18
February 2022.
(2) Mr. Richard Boléat and Ms Vivien Gould were appointed to the Boardwith
effect 1 March 2022.
Investment Manager
Third Point LLC
55 Hudson Yards,
New York, NY 10001,
United States of America.
Auditors
Ernst & Young LLP
PO Box 9, Royal Chambers
St Julian’s Avenue,
St Peter Port, Guernsey, GY1 4AF,
Channel Islands.
Legal Advisors (UK Law)
Herbert Smith Freehills LLP
Exchange House, Primrose Street,
London, EC2A 2HS,
United Kingdom.
Registrar and CREST Service Provider
Link Market Services (Guernsey) Limited (formerly Capita Registrars (Guernsey)
Limited) Mont Crevelt House,
Bulwer Avenue,
St Sampson, Guernsey, GY2 4LH,
Channel Islands.
Registered Office
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Administrator and Secretary
Northern Trust International Fund
Administration Services (Guernsey) Limited,
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
Legal Advisors (Guernsey Law)
Mourant
Royal Chambers, St Julian’s Avenue,
St Peter Port, Guernsey, GY1 4HP,
Channel Islands.
Receiving Agent
Link Market Services Limited
The Registry,
34 Beckenham Road,
Beckenham, Kent, BR3 4TU,
United Kingdom.
Corporate Broker
Numis Securities Limited
45 Gresham Street,
London, EC2V 7BF,
United Kingdom.
Glossary
Activism/Constructivism
An approach where an investment manager engages in dialogue with investee
companies to suggest opportunities to enhance value.
Buyback programme
A buyback is when a corporation purchases its own shares in the stock market.
Capital allocation
Asset and capital allocation are the processes of deciding where to put money
to work in the market.
Corporate credit
A corporate credit strategy typically looks to generate an attractive return
in excess of the current rate of inflation and an attractive total return,
investing in the debt securities of corporations.
Discount
The discount, typically expressed as a percentage, is the amount by which the
share price is less than the net asset value per share.
Event-driven
Event-driven refers to an investment strategy where the investment manager
attempts to profit from a company’s stock mispricing that may typically
occur before, during or after a corporate event.
Fundamental
Fundamental analysis is a valuation tool used by stock analysts to determine
whether a stock is over- or undervalued by the market.
Hedge basket
A hedge basket is an investment approach designed to reduce risk or exposure
to other asset classes or currencies by bundling certain securities together
and selling this bundle short (see Short selling).
Inflation
Inflation is a measure of how much more expensive goods and services have
become over a certain time period.
JP Morgan Investment Grade Index
This is an index that measures the performance of fixed- rate debt markets.
Long equity
Long equity is an investment strategy that seeks to take a position in
under-priced stocks in the manager’s opinion. Its counterpart is Short
selling, which seeks to profit from declining prices of over-priced stocks.
Mark to market
Mark to market is an accounting measure based on valuing assets on their
current market price, as opposed to the historic cost.
Monetary policy
Monetary policy is the action a central bank or a government can take to
influence how much money is in a country’s economy and how much it costs to
borrow.
MSCI World Index
This index includes a collection of stocks of all the developed markets of the
world, as defined by MSCI.
NASDAQ Index
The Nasdaq Composite is an index that measures the performance of more than
3,000 securities that are all listed on the tech-focused Nasdaq stock market.
Net equity exposure
Net equity exposure is the difference between a fund’s long positions and
its short positions in its equity holdings.
Privates
A private investment is an asset that is not listed on a public exchange, and
as a result has a more restricted ability to be bought and sold.
Public listing
A publicly-listed company is one whose shares are traded on an exchange.
S&P 500 Index
This is a market-capitalisation weighted index of the top 500 publicly traded
companies in the U.S.
Short selling
A strategy that attempts to profit from a pessimistic view of a certain
company, in which the investment manager borrows the security and sells it on
the open market, hoping to buy it back later for a lesser amount.
Structured credit
Mortgage-backed securities and other consumer asset- backed securities.
The Investment Manager
Third Point L.L.C. is the investment manager of Third Point Investors Limited.
The Master Fund
An exempted company formed under the laws of the Cayman Islands on 21 October
1996.
The Master Partnership
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.
Value strategies
Value investing involves a strategy of buying stocks that seem under-priced
relative to their intrinsic value.
The Association of Investment Companies (AIC) website also features a glossary
of definitions of relevant terms, which can be found at:
https://www.theaic.co.uk/aic/ glossary
Notice of Annual General Meeting
Notice is hereby given that the 2023 Annual General Meeting of Third Point
Investors Limited Company No. 47161, The “Company”) will be held at the
offices of Northern Trust International Fund Administration Services
(Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey,
Channel Islands, on 7 June 2023 at 12pm (the “Meeting”).
Resolution on Form of Proxy Agenda
Business to be proposed as Ordinary Resolutions:
1. To receive and adopt the Annual Report and Audited Financial
Statements of the Company for the year ended 31 December 2022.
2. To receive and adopt the Directors Remuneration Report as detailed in
the Annual Report and Audited Financial Statements of the Company for the year
ended 31 December 2022.
3. To re-appoint Ernst & Young LLP as Auditor of the Company until the
conclusion of the next Annual General Meeting.
4. To authorise the Board of Directors to determine the Auditor’s
remuneration.
5. To re-elect Rupert Dorey as a Director of the Company.
6. To re-elect Huw Evans as a Director of the Company.
7. To re-elect Josh Targoff as a Director of the Company.
8. To re-elect Claire Whittet as a Director of the Company.
9. To re-elect Richard Boléat as a Director of the Company.
10. To re-elect Vivien Gould as a Director of the Company.
Special Business to be proposed as Special Resolutions:
1. That the Company be authorised in accordance with Section 315 of the
Companies Law to make market acquisitions (within the meaning of section 316
of the Companies Law) of its Shares (either for retention as treasury shares
for future reissue and resale or transfer, or cancellation) provided that:
i. the maximum number of Shares hereby authorised to be purchased shall
be 14.99% of the issued Ordinary share capital of the Company (excluding
treasury shares) as at the date of this Annual General Meeting;
ii. the minimum price (exclusive of expenses) which may be paid for a
Share shall be $0.01;
iii. the maximum price (exclusive of expenses) which may be paid for a
Share shall be the higher of: (a) 105 per cent of the average of the middle
market quotations for a Share taken from the London Stock Exchange’s main
market for listed securities for the five business days before the purchase is
made; (b) the higher of the price of the last independent trade and the
highest current independent bid at the time of the purchase; and (c) such
other price as may be permitted by the Listing Rules of the UK Listing
Authority:
iv. the authority hereby conferred shall expire at the conclusion of the
next Annual General Meeting of the Company, or, if earlier, on the expiry of
eighteen months from the passing of this resolution, unless such authority is
renewed, varied or revoked by the Company in general meeting prior to such
time; and
v. the Company may make a contract to purchase Shares under the authority
hereby conferred prior to the expiry of such authority which will or may be
executed wholly or partly after the expiration of such authority and may make
a purchase of Shares pursuant to any such contract.
By Order of the Board
For and on behalf of
Northern Trust International Fund Administration Services (Guernsey) Limited
Secretary
25 April 2023
Notes
1. A member entitled to attend and vote at the meeting may appoint one or
more proxies to exercise all or any of the member’s rights to attend, speak
and vote at the meeting. A proxy need not be a member of the Company but must
attend the meeting for the member’s vote to be counted. If a member appoints
more than one proxy to attend the meeting, each proxy must be appointed to
exercise the rights attached to a different share or shares held by the
member. If a member wishes to appoint more than one proxy they may do so at
www.signalshares.com.
2. To be effective, the proxy vote must be submitted at
www.signalshares.com so as to have been received by the Company’s registrars
not less than 48 hours (excluding weekends and public holidays) before the
time appointed for the meeting or any adjournment of it. By registering on the
Signal shares portal at www.signalshares.com, you can manage your
shareholding, including:
- cast your vote
- change your dividend payment instruction
- update your address
- select your communication preference.
Any power of attorney or other authority under which the proxy is submitted
must be returned to the Company’s Registrars, LINK Group, PXS 1, Link Group,
Central Square, 29 Wellington Street, Leeds, LS1 4DL. If a paper form of proxy
is requested from the registrar, it should be completed and returned to LINK
Group, PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL
to be received not less than 48 hours before the time of the meeting.
3. Pursuant to Regulation 41(1) of the Uncertificated Securities
Regulations 2001 (as amended), the Company has specified that only those
members registered on the register of members of the Company at close of
business on 5 June 2023 (the Specified Time) (or, if the meeting is adjourned
to a time more than 48 hours after the Specified Time, by close of business on
the day which is two days prior to the time of the adjourned meeting) shall be
entitled to attend and vote at the meeting in respect of the number of shares
registered in their name at that time. If the meeting is adjourned to a time
not more than 48 hours after the Specified Time, that time will also apply for
the purpose of determining the entitlement of members to attend and vote (and
for the purposes of determining the number of votes they may cast) at the
adjourned meeting. Changes to the register of members after the relevant
deadline shall be disregarded in determining the rights of any person to
attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so for the meeting and any
adjournment(s) thereof by using the procedures described in the CREST Manual.
CREST personal members or other CREST sponsored members, and those CREST
members who have appointed a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
5. In order for a proxy appointment or instruction made using the CREST
service to be valid, the appropriate CREST message (a CREST Proxy Instruction)
must be properly authenticated in accordance with Euroclear UK & Ireland
Limited’s specifications and must contain the information required for such
instruction, as described in the CREST Manual (available via
www.euroclear.com/CREST). The message, regardless of whether it constitutes
the appointment of a proxy, or is an amendment to the instruction given to a
previously appointed proxy must, in order to be valid, be transmitted so as to
be received by the Company’s registrars (ID: RA10) by the latest time(s) for
receipt of proxy appointments specified in Note 3 above. For this purpose, the
time of receipt will be taken to be the time (as determined by the time stamp
applied to the message by the CREST Application Host) from which the
issuer’s agent is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST . After this time, any change of instructions to
proxies appointed through CREST should be communicated to the appointee
through other means.
6. CREST members and, where applicable, their CREST sponsors or voting
service providers should note that Euroclear UK & Ireland Limited does not
make available special procedures in CREST for any particular messages. Normal
system timings and limitations will therefore apply in relation to the input
of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or
sponsored member or has appointed a voting service provider(s), to procure
that his CREST sponsor or voting service provider(s) take(s)) such action as
shall be necessary to ensure that a message is transmitted by means of the
CREST system by any particular time. In this connection, CREST members and,
where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings
(www.euroclear.com/CREST). (http://www.euroclear.com/CREST))
7. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001 (as amended).
8. Any corporation which is a member can appoint one or more corporate
representatives who may exercise on its behalf all of its powers as a member
provided that they do not do so in relation to the same shares.
9. Any electronic address provided either in this Notice or in any related
documents (including the Form of Proxy) may not be used to communicate with
the Company for any purposes other than those expressly stated.
10. If you need help with voting online, or require a paper proxy form, please
contact our Registrar, Link Group by email at
shareholderenquiries@linkgroup.co.uk , or you may call Link on 0871 664 0300
if calling from the UK, or +44 (0) 371 664 0300 if calling from outside of the
UK. The office is open between 9.00 a.m. – 5.30 p.m., Monday to Friday
excluding public holidays in England and Wales. Submission of a Proxy vote
shall not preclude a member from attending and voting in person at the meeting
in respect of which the proxy is appointed or at any adjournment thereof.
Legal Information
Third Point Investors Limited (“TPIL”) is a feeder fund listed on the
London Stock Exchange that invests substantially all of its assets in Third
Point Offshore Fund, Ltd (“Third Point Offshore”). Third Point Offshore is
managed by Third Point LLC (“Third Point” or “Investment Manager”), an
SEC-registered investment adviser headquartered in New York.
Unless otherwise noted, all performance, portfolio exposure and other
portfolio data included herein relates to the Third Point Offshore Master Fund
L.P. (the “Fund”). Exposures are categorized in a manner consistent with
the Investment Manager’s classifications for portfolio and risk management
purposes.
Past performance is not necessarily indicative of future results, and there
can be no assurance that the Funds will achieve results comparable to those of
prior results, or that the Funds will be able to implement their respective
investment strategy or achieve investment objectives or otherwise be
profitable.
This document is being furnished to you on a confidential basis to provide
summary information regarding a potential investment in the Funds and may not
be reproduced or used for any other purpose. Your acceptance of this document
constitutes your agreement to (i) keep confidential all the information
contained in this document, as well as any information derived by you from the
information contained in this document (collectively, “Confidential
Information”) and not disclose any such Confidential Information to any
other person, (ii) not use any of the Confidential Information for any purpose
other than to consider an investment in the Funds, (iii) not use the
Confidential Information for purposes of trading any security, (iv) not copy
this document without the prior written consent of Third Point and (v)
promptly return this document and any copies hereof to Third Point, or destroy
any electronic copies hereof, in each case upon Third Point’s request
(except that you may retain copies as required by your compliance program).
The distribution of this document in certain jurisdictions may be restricted
by law. Prospective investors should inform themselves as to the legal
requirements and tax consequences of an investment in the Funds within the
countries of their citizenship, residence, domicile and place of business.
All profit and loss or performance results are based on the net asset value of
fee-paying investors only and are presented net of management fees, brokerage
commissions, administrative expenses, any other expenses of the Funds, and
accrued incentive allocation, if any, and include the reinvestment of all
dividends, interest, and capital gains. From Fund inception through December
31, 2019, each the Fund’s historical performance has been calculated using
the actual management fees and incentive allocations paid by the Fund. The
actual management fees and incentive allocations paid by the Fund reflect a
blended rate of management fees and incentive allocations based on the
weighted average of amounts invested in different share classes subject to
different management fee and/or incentive allocation terms. Such management
fee rates have ranged over time from 1% to 3% (in addition to leverage factor
multiple, if applicable) per annum. The amount of incentive allocations
applicable to any one investor in the Fund will vary materially depending on
numerous factors, including without limitation: the specific terms, the date
of initial investment, the duration of investment, the date of withdrawal, and
market conditions. As such, the net performance shown for the Fund from
inception through December 31, 2019 is not an estimate of any specific
investor’s actual performance. During this period, had the highest
management fee and incentive allocation been applied solely, performance
results would likely be lower. For the period beginning January 1, 2020, each
Fund’s historical performance shows indicative performance for a new issues
eligible investor in the highest management fee (2% per annum), in addition to
leverage factor multiple, if applicable, and incentive allocation rate (20%)
class of the Fund, who has participated in all side pocket private investments
(as applicable) from March 1, 2021 onward. An individual investor’s
performance may vary based on timing of capital transactions. The market price
for new issues is often subject to significant fluctuation, and investors who
are eligible to participate in new issues may experience significant gains or
losses. An investor who invests in a class of Interests that does not
participate in new issues may experience performance that is different,
perhaps materially, from the performance reflected above due to factors such
as the performance of new issues. The inception date for Third Point Offshore
Fund, Ltd. is December 1, 1996, Third Point Partners L.P. is June 1, 1995,
Third Point Partners Qualified L.P. is January 1, 2005, Third Point Ultra Ltd.
is May 1, 1997, and Third Point Ultra Onshore LP is January 2019. All
performance results are estimates and should not be regarded as final until
audited financial statements are issued.
While the performances of the Funds have been compared here with the
performance of well-known and widely recognized indices, the indices have not
been selected to represent an appropriate benchmark for the Funds whose
holdings, performance and volatility, among other things, may differ
significantly from the securities that comprise the indices. Investors cannot
invest directly in an index (although one can invest in an index fund designed
to closely track such index). Indices performance includes reinvestment of
dividends and other earnings, if any.
All information provided herein is for informational purposes only and should
not be deemed as a recommendation or solicitation to buy or sell securities
including any interest in any fund managed or advised by Third Point. All
investments involve risk including the loss of principal. This transmission is
confidential and may not be redistributed without the express written consent
of Third Point LLC and does not constitute an offer to sell or the
solicitation of an offer to purchase any security or investment product. Any
such offer or solicitation may only be made by means of delivery of an
approved confidential offering memorandum. Nothing in this presentation is
intended to constitute the rendering of “investment advice,” within the
meaning of Section 3(21)(A)(ii) of ERISA, to any investor in the Funds or to
any person acting on its behalf, including investment advice in the form of a
recommendation as to the advisability of acquiring, holding, disposing of, or
exchanging securities or other investment property, or to otherwise create an
ERISA fiduciary relationship between any potential investor, or any person
acting on its behalf, and the Funds, the General Partner, or the Investment
Manager, or any of their respective affiliates.
Specific companies or securities shown in this presentation are for
informational purposes only and meant to demonstrate Third Point’s
investment style and the types of industries and instruments in which the
Funds invest and are not selected based on past performance. The analyses and
conclusions of Third Point contained in this presentation include certain
statements, assumptions, estimates and projections that reflect various
assumptions by Third Point concerning anticipated results that are inherently
subject to significant economic, competitive, and other uncertainties and
contingencies and have been included solely for illustrative purposes. No
representations, express or implied, are made as to the accuracy or
completeness of such statements, assumptions, estimates or projections or with
respect to any other materials herein. Third Point may buy, sell, cover or
otherwise change the nature, form or amount of its investments, including any
investments identified in this letter, without further notice and in Third
Point’s sole discretion and for any reason. Third Point hereby disclaims any
duty to update any information in this letter.
Information provided herein, or otherwise provided with respect to a potential
investment in the Funds, may constitute non-public information regarding Third
Point Investors Limited, a feeder fund listed on the London Stock Exchange,
and accordingly dealing or trading in the shares of the listed instrument on
the basis of such information may violate securities laws in the United
Kingdom, United States and elsewhere.
While Third Point believes the information in this presentation to be
accurate, no reliance on this presentation should be placed. The information
contained herein is subject to change without notice. An offer to invest in
the Funds will only be made pursuant to the confidential private placement
memorandum (the “PPM”), the Fund’s limited partnership agreement (as
applicable), and the Fund’s subscription agreement, subject to any
disclaimers, terms and conditions contained therein. Investors are encouraged
to read the PPM and consult with their own advisers before deciding whether to
invest in the Funds and periodically thereafter. Third Point will not accept
new subscriptions into Third Point Partners L.P. and Third Point Partners
Qualified L.P. from any non-US investor unless otherwise permissible under
applicable law.
The representative in Switzerland is FundRock Switzerland SA, Route de
Cité-Ouest 2, 1196 Gland, Switzerland. The paying agent in Switzerland is
BCGE. The Prospectus/Offering Memorandum, the Articles of Association and
audited financial statements of those funds available in Switzerland can be
obtained free of charge from the representative in Switzerland. The place of
performance and jurisdiction is the registered office of the representative in
Switzerland with regards to the Shares distributed in and from Switzerland.
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