REG-Third Point Investors Ltd: Annual Report & Audited Financial Statements for the Period Ended 31 December 2023
22/04/2024 07:15
22 April 2024
Third Point Investors Limited (the "Company")
ANNUAL REPORT & AUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
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 2023.
Financial Key Points
* The Company produced a 4.0% NAV total return, and a -5.8% result on a share
price basis. This compares with a 24.4% return for the MSCI World Index and a
26.3% return for the S&P 500 Index over the same period.
* While this represents a disappointing result, the Investment Manager
repositioned the portfolio more towards high conviction and concentrated
investment exposures, which led to a material improvement in performance in
the second half of the year, when the NAV return outperformed broad market
indices.
* This improved performance has continued in 2024, with the Company generating
an 8.7% NAV return in Q1 2024 and 17.6% over the prior six months to 31 March
2024.
Portfolio Key Points
* While market strength broadened out as the year continued, 2023 was defined
by relatively narrow leadership, with the so-called “Magnificent Seven”
accounting for nearly half of the S&P 500’s full-year gains.
* Against this backdrop, Third Point underperformed the market for the full
year, with its short equity positions weighing on performance, as well as more
value-oriented long equity positions generally lagging the high-flying growth
stocks that carried the market-cap weighted indices.
* However, performance in the equity portfolio was very much a “tale of two
halves” for the Company. The Investment Manager retained conviction in some
of the same holdings that underperformed the market in the first half, and
several of these positions ended up rebounding in the second half, leading to
better performance.
* Third Point also restructured its single name short equity portfolio to be
far more diversified across industry, market cap, and factor profile, while
tightly limiting risk in names with high short interest. This revised strategy
yielded alpha in the second half, while also providing far less volatile
returns during the major short squeezes, witnessed in both July and December
2023.
* Meanwhile, both Corporate Credit and Structured Credit generated positive
returns consistently throughout the year, adding valuable uplift to Third
Point’s overall portfolio.
* Third Point sees a constructive backdrop in 2024, having addressed the
issues that contributed to underperformance and also expects market forces to
reward its approach to investing as the macroeconomic picture stabilises.
* The Investment Manager expects prospective returns to be driven by: a more
stable interest rate environment, which should create more corporate activity,
expanding opportunities for Third Point to engage with companies; Third
Point’s long-term investment horizon, which it believes will continue to be
a benefit in complex event-driven situations and mispriced high-quality
companies; and active trading around idiosyncratic credit events and taking
advantage of forced selling in the market in times of heightened stress.
Operational Key Points
Discount Management
* During the year, the discount to NAV widened from 15.4% to 23.3%, reflecting
the disappointing NAV total return and the challenging environment across the
wider investment trust sector. The discount has since tightened to around 18%
at the current time.
* The Board has made strenuous efforts to seek to narrow the discount both via
a substantial share buyback programme, and by offering a 25% stock tender at a
2% discount to NAV (the “Redemption Offer”) in 2024 and 2027, the former
of which has now been triggered.
* In 2023, the Company bought back approximately 2.6 million shares,
equivalent to $51.2 million in value, which was accretive to the Company’s
NAV by 44 cents per share. Over the last five years, the Company has bought
back 16.6 million shares for $311.1 million, which has been accretive by $2.13
per share.
* The Company will not repurchase shares for the duration of the 2024
Redemption Offer. However once the results of the Redemption Offer have been
announced, the Company may repurchase up to US$20 million of shares over the
balance of 2024 if, in the Board’s view, it is in the best interests of the
Company and shareholders to do so.
Redemption Offer
* As the average discount to NAV at which the shares traded in the six month
period to 31 March 2024 was more than 10%, the Board is offering shareholders
the opportunity to tender shares for redemption at a 2% discount to NAV in
April 2024. The Redemption Offer is for up to 25% of the Company’s issue
share capital.
* The full details of the 2024 Redemption Offer are set out in a circular
which was sent to shareholders earlier this month. The deadline to submit a
redemption notice is 1pm UK time on 8 May 2024.
Master Fund Redemptions
* As was detailed in the 2023 Interim Report, during the year there was a
change to the Investment Manager’s policy regarding redemptions from the
Master Fund in respect of illiquid holdings in private investments. Under the
new policy, redemptions will be settled approximately 93% in cash and 7% in
participation notes, the latter reflecting the pro rata share of legacy
private positions in the Master Fund.
* This percentage in participation notes will increase as redemptions from the
Master Fund are affected via tenders and the use of the buyback programme.
Assuming the Redemption Offer is fully subscribed, the holding in privates
through these participation notes will increase from 7% to 9%, all other
things being equal.
* Any realisation from the private portfolio will be reinvested in the Master
Fund and will reduce the Company’s overall exposure to participation notes.
Governance
* All resolutions at the June 2023 AGM were passed.
* The Board noted that Resolution 7 concerning the reappointment of Josh
Targoff was opposed by over 20% of eligible votes cast. As a result, pursuant
to UK Corporate Governance Code, the Board was required to engage directly
with shareholders who voted against his appointment and report back to the
market.
* Following this engagement, the Board’s Nomination & Remuneration Committee
recommended to the Board that Mr. Targoff not be proposed for re-election to
the Board at the next AGM in 2024, after which the Board will be comprised
wholly of Independent Non-Executive Directors. However, the Board value highly
Mr. Targoff’s contribution to the efficient management of the Company and he
will continue to attend Board and relevant Committee meetings as an observer.
Future Strategy for the Company
* In conjunction with the Board’s ongoing efforts to address the Company’s
discount to NAV, the Board is pleased to announce the appointment of Dimitri
Goulandris and Liad Meidar as directors, as soon as practicable. Their
relevant experience is in markets, mergers and acquisitions, and asset
management, and they will bring important new perspectives to the Board at
this time.
* Mr. Goulandris and Mr. Meidar have been introduced by Third Point, but the
Board has satisfied itself after due enquiries, including taking references
using Cornforth Consulting, that they are independent of the Investment
Manager. Both new directors will be put forward for re-election at the annual
general meeting of the Company to be held in May 2024, and the Board will
recommend that shareholders vote in favour of both their respective elections.
* The expanded Board will create a Strategy Committee (“Committee”)
comprised of the two new directors and Richard Boléat, chaired by Mr.
Goulandris. The Committee will be responsible for commencing a full review to
consider how the Company may best deliver value to shareholders going
forward. The review will be concluded within a six-month period (the
“Strategy Review”).
* The Strategy Review will be charged with evaluating all possible options,
including offensive M&A opportunities, investment strategy mixes, corporate
continuation votes or further tenders, and potentially other innovative
options. The Committee will seek shareholder consultation and input.
* At the conclusion of the Strategy Review, the Committee will present its
finding to the Board. If approved by the Board, the outcome will then be
reported by the Board to shareholders, and any recommended new proposals will
be put to shareholders and voted on by them as appropriate.
* If at the conclusion of the Strategy Review there are no new proposals
recommended by the Board to shareholders, the Board expects that, in due
course, it will invite shareholders to vote on the continuation, or otherwise,
of the Company.
* Under those circumstances, the Board will take into account the performance
of the Company over the relevant period based on NAV per share and other
metrics that it considers appropriate in determining whether to recommend
voting in favour of the continuation resolution.
Rupert Dorey, Chair of the Company, commented:
“The Board has been responsive to shifting market forces and structural
issues that have been affecting TPIL and the investment trust sector. By
authorising share buybacks, working with the Investment Manager to increase
transparency in its reporting, and the implementation of exchange facility and
tender offer programmes, we have made decisions that we believe are in the
best interests of the Company and the shareholder base as a whole.
“The addition of two new Directors with different skills and experience and
the Strategy Review should give shareholders further opportunities to profit
from their investment in the Company.”
Media Enquiries
Charles Ryland / Henry Wilson
charles.ryland@buchanancomms.co.uk / Tel: Tel: +44 (0)20 7466 5107
henry.wilson@buchanancomms.co.uk / 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 43-person
investment team, a robust quantitative data and analytics team, and a deep,
tenured business team. Third Point manages approximately $11.2 billion in
assets for sovereign wealth funds, endowments, foundations, corporate & public
pensions, high-net-worth individuals, and employees.
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, seeking to optimise 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 what it believes is 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 we believe 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 2023
Annualised Historical Performance (%)
1 Year 3 Year 5 Year 10 Year Since TPIL Inception
Third Point Investors Limited (NAV) 4.0 -0.9 8.1 5.6 7.3
Third Point Investors Limited (Share Price) -5.8 -2.7 6.9 3.6 6.1
S&P 500 Index 26.3 10.0 15.7 12.0 9.4
MSCI World Index 24.4 7.8 13.4 9.2 6.9
Net Asset Value per Share
4.0%
2023: $25.43
2022: $24.46
Share Price
-5.8%
2023: $19.50
2022: $20.70
Chairman’s Statement
Dear Shareholder,
During 2023, TPIL returned 4.0% on a NAV basis and -5.8% on a share price
basis. This compares with returns of 24.4% and 26.3% for the MSCI World Index
and S&P 500 Index, respectively, over the same period. This clearly represents
a disappointing result following on from 2022, after which the Investment
Manager re-positioned the portfolio. This entailed a move towards more high
conviction and concentrated investment exposures, focussed on core areas of
competency such as deep value, event driven and activist strategies. These
changes were allied to Third Point’s deep strength in both traditional and
structured credit markets. The re-positioning led to a material improvement in
performance in the second half of the year, when the NAV return outperformed
both the MSCI World Index and the S&P 500 Index.
Credit has remained a steady and reliable low risk, low volatility performer.
The more concentrated equity exposure combined with greater discipline in
short equity and hedge positions resulted in a sharp turnaround in overall
equity attribution. This moved from -3.9% on a gross basis in the first half
of the year to +7.3% in the second half.
While adverse geopolitical and economic events during 2023 continued to plague
market sentiment, the expectation that a mild US recession was imminent proved
unfounded. US economic statistics continued to be strong.
The dramatic third quarter rout in the bond markets was propagated by a belief
– which proved unfounded – that the Fed would need to cut rates to stave
off recessionary risks.
Real interest rates moved sharply upwards in the third quarter, from around
1.5% to 2.5%, putting an end to the dovish monetary policy of previous years.
The interest rate landscape is returning to comparative historical norms.
Portfolio Drivers
During 2023, credit was the largest source of returns delivering 4.1% gross at
the portfolio level. Of this, 2.3% was from Corporate Credit and 1.8% from
Structured Credit. In absolute terms, the Corporate Credit portfolio returns
of 18% exceeded those of the ICE Bank of America High Yield Index by 4%, as a
result of active trading and security selection. Returns on Bank and Telecom
credits proved to be particularly rewarding, with attractive capital structure
arbitrage opportunities being exploited successfully.
The Structured Credit portfolio generated a 7.5% return in the year and
outperformed the Bloomberg US Aggregate Index by over 2%. This was
attributable to the effective hedging of interest rate risk, as well as taking
advantage of technical opportunities in reperforming residential mortgage loan
securities, and in the shorter duration auto and student debt sectors.
Gross equity returns were 3.2% in 2023. Overall, event driven strategies
contributed 5.9% to gross return, while activist and hedging strategies
detracted -0.4% and -2.3% respectively. The majority of the equity returns
were achieved in the second half. Significantly, a modification in single name
short equity positions to a more diversified pan-industry strategy assisted in
limiting risk in certain stocks, yielding more consistent alpha with lower
overall volatility.
TPIL continues to have around half of its net equity exposure to AI themed
equities such as Microsoft, Amazon and Meta, in addition to concentrated
positions in a diversified portfolio of companies it considers undervalued
such as Danaher, PCG and UBS. These companies are anticipated to benefit from
more positive news on lower inflation and lower rates in due course and some
from upcoming catalyst events.
Net equity exposure during the year varied between 40% and 70%, ending the
year at the higher end of the range. Exposure to corporate and structured debt
remained between 40-45% during the year.
The Privates portfolio, including the Participation notes, detracted -0.8% on
a gross basis at the portfolio level. There have been a limited number of
liquidity events to date.
Discount Management
During the year the discount to NAV widened from 15.4% to 23.3%. Most of the
investment trust sector has been subject to widening discounts in 2023,
averaging around 15% on a market capitalisation-weighted basis.
The Board has made strenuous efforts to seek to narrow the discount both via a
substantial share buyback programme, and by offering a 25% stock tender at a
2% discount to NAV in 2024 and in 2027. The $50m one-year buyback programme
commenced in September 2022 and was renewed in September 2023 with a further
$25m available for buybacks until April 2024. Despite some success in
stabilising the discount in the first half of 2023 at around 15%, it has
widened to around 23% before tightening to around 18% at the current time.
During 2023, the Company bought back 2.6 million shares equivalent to $51.2
million of value, which was accretive by $0.44c to NAV per share. Over the
last five years the Company has bought back 16.6 million shares for $311.1
million, which has been accretive by $2.13 per share.
The Company will not repurchase any of its Shares for the duration of the
Redemption Offer (see below). Once the results of the Redemption Offer have
been announced, the Company may repurchase up to US$20m of Shares over the
balance of 2024 if, in the Board’s view, it is in the best interests of the
Company and Shareholders to do so.
Borrowing Facility
In June 2023, the Company repaid its $150 million borrowing facility from J.P.
Morgan in full, ahead of its technical maturity in August 2023. The Company
now has no structural leverage.
Redemption Offer
On 1 April 2021, the Board announced the implementation of two potential
Redemption Offer opportunities, on 31 March 2024 and 31 March 2027 for
Shareholders to tender shares for redemption if the average market price of
the Shares has been more than 10 per cent. And 7.5 per cent. below NAV,
respectively, for the six-month period preceding each Redemption Offer Date.
The average discount to NAV at which the Shares traded in the six month period
to 31 March 2024 was more than 10% and, accordingly, the Board is offering
Shareholders the opportunity to tender Shares for redemption.
The Redemption Offer is for up to 25 per cent. of the Company’s issued share
capital. Eligible Shareholders will be able to decide whether to tender some
or all of their Shares within the overall limits of the Redemption Offer (but
tenders in excess of a Shareholder’s Basic Entitlement will only be accepted
to the extent that other Shareholders tender less than their Basic
Entitlement).
The full details of the Redemption Offer are set out in a Circular which was
sent to shareholders earlier this month.
Master Fund Redemptions
In the 2023 Interim Report, I detailed a change to the policy for redemptions
from the Master Fund in respect of the Company’s illiquid holdings in
Private investments. Under the new policy, redemptions from the Master Fund
will be settled approximately 93% in cash and 7% in participation notes. The
participation notes, as a percentage of the Company’s net assets, will
increase as redemptions from the Master Fund are affected via tenders and use
of the buyback programme. Assuming the Redemption Offer is fully subscribed,
the holding in Privates will increase from 7% to 9% all other things being
equal. Any realisation from the Privates portfolio will be reinvested in the
Master Fund and will reduce the Company’s overall exposure to participation
notes. This policy was introduced to allow the Investment Manager to manage
the underlying portfolio more effectively, by offering a more stable platform
for investors by permitting the Manager to focus on its core strategies.
Governance
All resolutions at the June 2023 AGM were passed. The Board noted that
Resolution 7 concerning the reappointment of Josh Targoff was opposed by over
20% of eligible votes cast. As a result, pursuant to the UK Corporate
Governance Code the Board was required to engage directly with shareholders
who voted against his appointment and report back to the market within six
months.
The Board engaged with, and sought feedback from, a wide variety of investors.
This exercise indicated significant shareholder sentiment that the Board
should be composed exclusively of independent directors, as is consistent with
the vast majority of investment trusts listed on the London Stock Exchange.
Following a review, the Nomination & Remuneration Committee recommended to the
Board that Mr. Targoff not be proposed for re-election to the Board at the
next AGM, after which the Board will be comprised wholly of Independent
Non-Executive Directors. However, the Board values highly Mr. Targoff’s
contribution to the efficient management of the Company and he will continue
to attend Board and relevant Committee meetings as an observer.
Future Strategy for the Company
As a Board we believe that TPIL offers a valuable access point to a set of
differentiated strategies in equities and credit in a London-listed vehicle.
Investors have bought into the Company on the basis of Dan Loeb and Third
Point’s long-term performance track record. Returns in 2023 have been
disappointing against the strength of the S&P 500 Index, which has been
largely driven by the concentrated outperformance of tech stocks.
In response to this, Dan Loeb held meetings with investors in June 2023 and
again in March 2024 to outline his investment ideas in more detail. These
meetings were well received by those who attended.
The Board is encouraged by the recent strong performance of the Investment
Manager, with the Company generating an 8.7% NAV return in Q1 2023 and 17.6%
over the prior six months to 31 March 2024. While past performance is not a
predictor of future gains, the Board notes that the Investment Manager’s
long-term track record, along with its flexible and opportunistic strategy,
incorporating a broad range of equity and credit tools, can deliver favourable
risk-adjusted returns in the current environment. Firstly, engaging in active
trading around idiosyncratic credit events and acting as a provider of
liquidity in times of heightened stress. Secondly, taking advantage of complex
event driven situations in what are perceived to be mispricing opportunities
in high quality companies, and finally catalyst driven corporate/activist
opportunities.
Notwithstanding the recent strong performance, a meaningful discount to NAV
persists. Discounts to NAV – and investor concern about them – is an issue
throughout the listed fund sector and, with the intention to be proactive and
creative in facing this, the Board has been working with the Investment
Manager to explore further options for the Company.
In conjunction with these efforts, the Board is pleased to announce the
appointment of Dimitri Goulandris and Liad Meidar as directors, to take place
as soon as practicable. Their relevant experience is in markets, mergers and
acquisitions, and asset management, and they will bring important new
perspectives to the Board at this time. Mr. Goulandris and Mr. Meidar have
been introduced by Third Point, but the Board has satisfied itself after due
enquiries, including taking references using Cornforth Consulting, that they
are independent of the Investment Manager and they have each confirmed to the
Board that they understand the responsibilities of directors to act solely in
the interest of the Company and thus of all Shareholders. In accordance with
the Company’s Articles of Incorporation, both new directors will be put
forward for election at the annual general meeting of the Company to be held
in May 2024, and the Board will recommend that Shareholders vote in favour of
both their respective elections.
The expanded Board will create a Strategy Committee (“Committee”)
comprised of the two new directors and Richard Boléat, chaired by Mr.
Goulandris. This Committee will be responsible for commencing a full review to
consider how the Company may best deliver value to Shareholders going forward,
which will be concluded within a six-month period from the time the Committee
is launched (the “Strategy Review”). The Strategy Review is not a formal
sale process and the Company is not inviting offers for the Company to be
acquired. The Committee will be charged with evaluating all possible options,
including offensive M&A opportunities, investment strategy mixes, corporate
continuation votes or further tenders, and potentially other innovative
options. It will have the power to hire outside advisors as necessary so that
it can consider the broadest range of possibilities. As part of the Strategy
Review, the Company will seek shareholder consultation and input.
At the conclusion of the Strategy Review, the Committee will present its
findings to the Board. If approved by the Board, the outcome will then be
reported by the Board to Shareholders, and any recommended new proposals will
be put to Shareholders, and voted on by them as appropriate. If at the
conclusion of the Strategy Review there are no new proposals recommended by
the Board to Shareholders, the Board expects that, in due course, it will
invite shareholders to vote on the continuation, or otherwise, of the Company.
Under those circumstances, the Board will take into account the performance of
the Company over the relevant period based on the NAV per Share and other
metrics that it considers appropriate in determining whether to recommend
voting in favour of the continuation resolution.
Summary
The Board has been responsive to shifting market forces and structural issues
that have been affecting TPIL and the investment trust sector. By authorising
share buybacks, working with the Investment Manager to increase transparency
in its reporting, and the implementation of exchange facility and Redemption
Offer programmes, we have made decisions that we believe are in the best
interests of the Company and the shareholder base as a whole.
The addition of two new Directors with different skills and experience and the
conduct of the Strategy Review should give shareholders further opportunities
to profit from their investment in the Company. In the meanwhile, my
colleagues and I would like to thank shareholders for their continuing
support.
Rupert Dorey
Chairman
19 April 2024
PORTFOLIO
Investment Manager’s Review
Strategy Performance
As stated in the Chairman’s Statement, for the 12 months ended 31 December
2023, Third Point Investors Limited’s net asset value (“NAV”) per share
increased by 4.0%, while the corresponding share price fell 5.8%. This
compares with the MSCI World Index and S&P 500 Index returns of 24.4% and
26.3%, respectively. The Company’s share price return included the effects
of the discount to NAV widening from -15.4% to -23.3%.
After a bruising 2022, in which inflation took hold and tight monetary policy
reigned, it was difficult to predict the force with which markets snapped back
in 2023. While not without moments of uncertainty – including the regional
bank crisis in March and lingering concerns about the economy tipping into a
recession – 2023 turned out to be a strong year for headline equity
performance. This had roots in moderating inflation and surprisingly strong
job growth, making it more likely that the U.S. Federal Reserve would pivot
from rate hikes to rate cuts in 2024. While the buoyancy broadened out as the
year wore on, 2023 was defined by relatively narrow leadership: the so-called
“Magnificent Seven” of Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta
and Tesla accounted for nearly half of the S&P 500’s full year gains, and
the tech-focused NASDAQ advanced by more than 50%. Underscoring this dynamic,
the S&P 500 Index returned 26.3% for 2023, while the S&P 500 Equal Weighted
Index returned 13.9%.
Against this backdrop, Third Point underperformed the broader market for the
full year, with its short equity positions (-8.0% gross contribution to return
for the Master Fund) weighing on performance, as well as more value-oriented
long equity positions (11.2% gross contribution to return) generally lagging
the high-flying growth stocks that carried the market-cap weighted indices.
Both Corporate Credit (2.3% gross contribution to return) and Structured
Credit (1.8% gross contribution to return), meanwhile, contributed consistent,
positive returns throughout the year. Finally, as the public listing timeline
for many venture companies continued to be extended, the Private portfolio
(-0.8% gross contribution to return) saw modest markdowns.
2023 Performance Review
Equities
Performance in the equity portion of the portfolio was very much a “tale of
two halves”. Short equity positions were generally challenged during the
market’s strength in 1H, especially in January 2023, when the same higher
growth, non-profitable technology stocks that were punished in 2022 came
roaring back to life. On the long side of the equity portfolio, several
event-driven positions provided conservative guidance during the first half of
the year (including Danaher, IFF and Bath & Body Works). In addition, a couple
of holdings (Fidelity National Information Services and AIG) were exposed to
the financial sector during the Silicon Valley Bank failure in March and the
short-lived contagion that followed.
In assessing the lessons learned from this period, Third Point’s efforts in
2023 to improve performance involved significant analysis and scrutiny of not
just what it invests in, but how it invests. When the firm thinks about its
competitive advantages in today’s investing landscape, duration,
concentration, and an event-driven focus are top of its list.
On the long side of the equity portfolio, Third Point’s best outcomes have
been in deeply researched names that represent a large portion of firm
capital. Some of these investments have involved significant engagement with
the company to improve performance and enhance returns. Having deep
fundamental conviction has afforded Third Point with the patience to see these
investments through, even when markets or factors cause temporary
underperformance. Realising this was the case with several of its
underperforming long positions in the first half of the year, the firm
retained conviction in these names, which set the stage for the long equity
portfolio’s outperformance in the second half of the year. First half
laggards such as Danaher and Bath & Body Works delivered far better
performances in the second half of the year.
Third Point applied a similar analytical framework to single name
short-selling – focusing more on the how rather than the what. Analysis of
historical results revealed some telling data on shorts: namely, the track
record of identifying alpha-generating shorts has been excellent, but the
monetisation of those ideas has been suboptimal, in part due to the extreme
volatility in heavily shorted stocks that caused the firm to shorten duration.
Third Point addressed this by restructuring its single name short portfolio to
be far more diversified across industry, market cap, and factor profile, while
tightly limiting risk in names with high short interest. This revised strategy
not only yielded alpha since being implemented mid-year, but returns have also
come with far less volatility, even during the major short squeezes witnessed
in July and December of 2023.
Corporate Credit and Structured Credit
Both Corporate Credit and Structured Credit portfolios generated consistent,
positive returns throughout the year, adding valuable ballast to Third
Point’s overall portfolio.
Corporate credit generated approximately 18% gross return on assets in 2023,
driven by active trading and security selection. First half performance was
driven by successful investments in cruise lines and taking advantage of the
March market selloff by buying regional banks and Credit Suisse/UBS debt
securities, a joint venture with Third Point’s equity team that lead to a
successful UBS equity investment. Second half performance was driven by
exposure to healthcare and telecom credits, as well as a significant tailwind
from the “everything rally” during the last two months of the year. The
high yield market generated 9% of its total 13.5% annual performance during
the last eight weeks of the year. While it was more difficult to generate
alpha during this period, Third Point increased its corporate credit exposure
to its 2023 peak near the October lows and so generated excellent returns on
that basis.
The telecom sector is one of the largest in the credit markets and lately one
of the most dynamic. During 2023, Third Point initiated sizeable positions in
several names, with total exposure exceeding 5% of total fund NAV. The firm
believes the sector is interesting because of a significant valuation derating
due to concerns about competition with fixed wireless products (offered by
wireless phone providers) and fibre upgrades by legacy and other carriers.
This will likely impact credits differently depending on their technology,
geography, and pre-existing competitive picture, creating a wealth of
opportunities. These telecom positions were also important drivers of
performance in 2023. For example, Frontier second lien bonds were up 24% on a
price basis from the summer lows in addition to generating a 10% current yield
in 2023.
Meanwhile, Third Point’s Structured Credit portfolio also outperformed the
market in 2023, generating approximately 8% gross return versus the Bloomberg
US Aggregate index’s 5.5% return. Each of the individual strategies within
the portfolio were positive except marketplace loans, which were only 1.5% of
the Master Fund NAV and experienced some mark-to-market losses based on
perceived recessionary concerns. Reperforming securities in the residential
mortgage space, comprising about 14% of NAV, delivered the largest
contribution to return for the year. Firmness in the residential mortgage
sector was led by strong continued credit performance and resilient home
prices, which counteracted the negative effect of interest rate volatility on
longer duration assets. Interest rate hedges were also a positive contributor,
and Third Point actively traded the portfolio throughout the year.
Outlook
In Equities, Third Point sees a constructive backdrop in 2024, having
addressed some of the issues that contributed to underperformance in 2023 and
expects market forces to reward its approach to investing as the macroeconomic
picture stabilises. While assets have certainly priced in some of the good
news on inflation and rates, Third Point still believes headline equity market
multiples exaggerate the valuation most companies are trading for and
continues to find what it believes are high-quality companies trading at
reasonable valuations. The firm expects prospective returns to be driven by:
1) a more stable interest rate environment, which should create more corporate
activity, expanding opportunities for Third Point to invest in “self-help”
situations or those that require more active engagement, and 2) Third
Point’s duration as a holder, which it believes will continue to be a
benefit in both complex event-driven situations, and mispriced, high quality
companies. On the long side, going forward, Third Point expects to further
concentrate the portfolio in its highest conviction names. On the short side,
Third Point is encouraged by the results of imposing tighter risk parameters,
and expects to increase the size of its single name short equity portfolio.
In Corporate Credit, the high yield market has been supported over the last
few years by favourable supply and demand drivers that we believe are fading.
The post-COVID recovery generated a significant volume of upgrades to credits
that had been downgraded to high-yield during the pandemic, resulting in a net
negative supply. Nearly all these names have been upgraded and returned to
investment grade, so this impact is behind us. Second, new issue volumes have
slowed to a relative trickle in the face of interest rate volatility as
issuers were hesitant to look foolish locking in high rates or were holding
out in the hope that rates would decline. Interest rates are stabilising and
private equity is adjusting to the new environment, which should lead to
higher new issuance. Third, larger private credit firms are competing very
aggressively with public markets for new deals, making loans that would be
very challenging to complete in the public markets and even offering issuers
the ability to pay interest in kind. Third Point expects this source of
capital to begin to dry up, as the vast sums of money raised in the last two
years are spent and these investors begin to face widespread credit issues in
their existing portfolios which were largely created during a period of trough
interest rates and peak economic activity. Much like private equity, the
expectation is that a vintage year will be an important driver of private
credit performance.
On a fundamental basis, the impact of higher rates has the potential to create
widespread credit stress in high yield. According to a recent Bank of America
study, 40% of all B/CCC issuers (roughly half the market) will be free cash
flow negative as they refinance maturing debt with more expensive debt due to
higher interest rates. It is also worth noting that this analysis, done at the
beginning of 2024, assumed that the U.S. Federal Reserve would cut interest
rates by 250 basis points as was being projected by the market at the time. It
is becoming more probable that that the Fed cuts do not match those
expectations or, if they do, they are accompanied by economic weakness which
would hamper corporate cash generation. This may or may not lead to large
increases in defaults, but it is difficult to see how there will not be
increasing credit stress. Third Point is equally happy investing in stressed
performing debt as it is investing in distressed credits – the firm’s
returns in both are relatively similar, so it expects to be busy either way.
In Third Point’s view, credit will remain attractive for an extended period,
with continuing periods of volatility generating good entry points.
In Structured Credit, Third Point remains constructive on the residential
mortgage sector, and it comprises 65% of the firm’s exposure in this asset
class. The U.S. mortgage market encompasses housing with $43 trillion of
market value with only $13 trillion of mortgage debt. House prices were up
close to 5% last year. While it’s fair to expect some price declines if
rates fall and housing turnover increases, there is a significant amount of
equity in borrowers’ hands.
Looking ahead to 2024, the banking crisis last March caused banks to try to
optimise their portfolios and sell the easiest, shortest duration assets that
are capital intensive. Third Point estimates there are $65 billion of consumer
loans that banks want to sell over the next few years where unlevered loans
are yielding 15% with capital appreciation upside. Spreads in structured
credit look appealing versus public corporate credit and so Third Point
expects that with more investors looking at structured credit for yield,
spreads will tighten across many collateral types, particularly commercial
mortgage-backed securities (CMBS) where real estate security selection is
critical. The long-awaited opportunity in commercial real estate (CRE) looks
more promising this year, as lower rates and a maturity wall of CRE debt
should finally shake loose some distressed securities.
Third Point LLC
Portfolio Analysis
As at 31 December 2023
Exposure
Portfolio Detail1 Long Short Net
Equity
Activism/Constructivism 8.2% -2.3% 5.9%
Fundamental & Event 82.3% -17.5% 64.7%
Portfolio Hedges2 0.0% -0.2% -0.2%
Total Equity 90.4% -20.0% 70.4%
Credit
Corporate & Sovereign 17.4% -0.3% 17.2%
Structured 25.0% -0.1% 24.9%
Total Credit 42.4% -0.3% 42.1%
Privates 7.8% 0.0% 7.8%
Other3 0.0% 0.0% 0.0%
Total Portfolio 140.6% -20.3% 120.3%
Exposure
Equity Portfolio Detail1 Long Short Net
Equity Sectors
Consumer Discretionary 16.1% -3.0% 13.1%
Consumer Staples 0.2% -0.7% -0.5%
Utilities 14.1% -2.8% 11.2%
Energy 0.9% -0.1% 0.8%
Financials 17.7% -3.8% 13.8%
Healthcare 6.5% -2.1% 4.4%
Industrials & Materials 17.5% -4.6% 12.8%
Enterprise Technology 10.0% -2.0% 8.0%
Media & Internet 7.6% -0.7% 6.9%
Portfolio Hedges2 0.0% -0.2% -0.2%
Total 90.4% -20.0% 70.4%
1 Unless otherwise stated, information relates to the Third Point Offshore
Master Fund L.P. Exposures are categorised in a manner consistent with the
Investment Manager’s classifications for portfolio and risk management
purposes.
2 Primarily broad-based market and equity-based hedges.
3 Includes currency hedges and macro investments. Rates and FX related
investments are excluded from the exposure figures.
The sum of long and short exposure percentages may not visually add to the
corresponding net figure due to rounding.
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.
Rob Schwartz
Managing Partner, Third Point Ventures
Since June 2000, Rob has been Managing Partner of Third Point Ventures, the
Menlo Park, California based venture capital arm of Third Point LLC. Rob is
presently a director of NextSilicon, Verbit, Sysdig, Kentik, Kumu Networks,
Aryaka, R2 Semiconductor, YellowBrick Data, Ushur, and Trullion. Previously,
for 23 years, he was the President of RF Associates North, a privately held
communications semiconductor manufacturer’s representative firm. Rob holds a
multi-discipline engineering degree from the University of California at
Berkeley.
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 and 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. Following a degree in Geography from Edinburgh University, 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, a role from which she retired in
2023. Over the last 10 years, she has held a variety of non-executive
directorships and is an experienced non-executive Director of both listed and
PE funds.
Directorships in other public listed companies:
Riverstone Energy Limited (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 2023 (“Annual
Report and Audited Financial Statements”).
The Annual Report and 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.
The Company has substantially all of its holding in the Master Fund share
class YSP, for which the Company has paid a management fee of 1.25% per annum.
This share class is subject to a 25% quarterly investor level redemption gate.
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 and the Board
authorised up to a further $25 million for buybacks over the period to April
2024.
The Company will not repurchase any of its Shares for the duration of the
Redemption Offer. Once the results of the Redemption Offer have been
announced, the Company may repurchase up to US$20m of Shares over the balance
of 2024 if, in the Board’s view, it is in the best interests of the Company
and Shareholders to do so.
In the year from 1 January 2023 to 31 December 2023, the total number of
shares which were bought back was 2.6 million, with an approximate value of
$51.2 million. The average discount at which purchases were made was 18.2%.
The buybacks effected during the year led to an accretion to NAV per share of
$0.44 cents.
Key performance indicators (“KPIs”)
At each Board meeting, the Board considers a number of performance measures to
assess the Company’s success in achieving its objectives. The KPIs 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 2026. 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,
the Directors meet regularly with the Investment Manager to review the
Company’s performance, and closely monitor the relationship with the
Investment Manager.
In its assessment of the viability of the Company, the Directors have carried
out a robust assessment of the principal risks facing the Company as set out
in the Directors’ Report.
The Board has announced that it will carry out a Strategy Review over the next
six months. At the conclusion of the Strategy Review, the Strategy Committee
will present its findings to the Board. If approved by the Board, the outcome
will then be reported by the Board to Shareholders, and any recommended new
proposals will be put to Shareholders, and voted on by them as appropriate. On
the assumption that the Committee is able to identify a positive direction for
the Company, which is approved by Shareholders, the Company will continue into
the future.
On that basis, the Board has a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall due over
the period to 31 December 2026.
Going Concern
The Master Fund Shares can be converted to cash to meet liabilities in respect
of, for example, Company expenses and the buyback programme, as they fall due.
In addition, the Redemption Offer for 25% of NAV, at a discount of 2% to NAV,
will also be funded through redemption of shares in the Master Fund. The
Redemption Offer is expected to be completed in June 2024 and, on the
assumption that the Redemption Offer is fully subscribed, this would imply
further redemptions from the Master Fund of approximately $156 million. The
Company has begun the process of redeeming shares in the Master Fund to
satisfy the cash requirement of the Redemption Offer in order to stay within
the investor level redemption limit of 25% each quarter.
The Board has announced that it will carry out a Strategy Review over the next
six months. At the conclusion of the Strategy Review, the Strategy Committee
will present its findings to the Board. If approved by the Board, the outcome
will then be reported by the Board to Shareholders, and any recommended new
proposals will be put to Shareholders, and voted on by them as appropriate. On
the assumption that the Committee is able to identify a positive direction for
the Company, which is approved by Shareholders, the Company will continue into
the future.
On that basis, after due consideration, and having made due enquiry of Third
Point, 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 2025 which is at least 12 months from the date of
approval of the financial statements.
There were no other events during the financial year outside the ordinary
course of business which, in the opinion of the Directors, may have had an
impact on the Annual Financial Statements for the year ended 31 December 2023.
Section 172 Report
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 year under review, the Board acted in the way which it considered, in good faith, would be most likely to promote the Company’s long-term sustainable success and to achieve its wider objectives for the benefit of Shareholders as a whole, having
had regard to the Company’s wider stakeholders and the other matters set out in section 172 of the UK Companies Act.
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”.
The impact of the Company’s operations on the community and the environment. The Board’s approach is described under Environmental, Social and Governance (ESG) Policies.
The desirability of the Company maintaining a reputation for high standards of business conduct. The Board’s approach is described under “Culture and Values”.
The need to act fairly as between members of the Company. The Board’s approach is described under “Stakeholders”.
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 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 Governance matters.
Stakeholders
The Company is an externally managed investment company whose activities are
all outsourced. It does not have any employees. The Board has identified its
key stakeholders, and how the Company engages with them, in the table below:
Stakeholder Key Considerations Engagement
Shareholders As an investment company, Third Point Investors Limited’s Shareholders are, in effect, both its owners and its customers, 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. At the
AGM in June 2023, a significant minority of shareholders voted against the reappointment of Josh Targoff to the Board. The Chairman engaged with shareholders and,
following these discussions, it has been agreed that Mr. Targoff will not stand for re-election to the Board at the AGM in May 2024. The Board has been under pressure for
some time from a minority group of the Company’s shareholders to take action to reduce the discount at which the Company’s shares are trading and, more recently, to
return capital at or close to NAV. This has culminated in the holding of a Redemption Offer for up to 25% of the issued shares at a discount of 2% of NAV expected to be
completed in June 2024.
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 agreeing the Redemption
Offer arrangements – both the Redemption Offer expected to be completed in June 2024 and any future Redemption Offers – the Board engage with the Investment Manager in
order to ensure a fair balance between the interests of shareholders and those of the Investment Manager. 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 and 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 2023, 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 investment team on ESG issues.
Assessing Sustainability Risks
Sustainability risk refers to an environmental, social or governance event or
condition that, if it occurs, could cause an actual or a potential material
negative impact on the value of an investment. The Investment Manager
therefore approaches sustainability risk analysis as a process of identifying
potential events that could cause a material negative impact on the value of
its clients’ investments.
The Investment Manager considers environmental, social, and governance events
or conditions as part of the investment process in areas where data
availability allows for analysis, with a focus on risks relating to governance
events or conditions. These are most relevant to the Master Fund, given the
Investment Manager’s history of shareholder engagement. The Investment
Manager has implemented procedures to identify, manage and monitor certain
sustainability risks relating to governance events including:
Identification: The Investment Manager has reviewed the sustainability risks
relating to governance events or conditions which may cause a material
negative impact on the value of its clients’ investments, should those risks
occur.
Management: While the Investment Manager’s portfolio managers and analysts
are provided with information on certain sustainability risks relating to
governance events or conditions, and are encouraged to take such
sustainability risks into account when making an investment decision,
sustainability risk would not by itself prevent the Investment Manager from
making any investment. Instead, sustainability risk relating to governance
events or conditions forms part of the overall risk management process, and is
one of many risks which may, depending on the specific investment opportunity,
be relevant to a determination of risk. However, the Investment Manager does
not apply any absolute risk limits or risk appetite thresholds which relate
exclusively to sustainability risk relating to governance events or conditions
as a separate category of risk.
Monitoring: As part of ongoing monitoring, the Investment Manager’s
portfolio managers may at times engage in Active Ownership. Active Ownership
is the process of communicating with issuers on governance issues, with a view
to monitor or influence governance outcomes within the issuer.
Governance risks are associated with the quality, effectiveness and process
for the oversight of day-to-day management of companies in which the Master
Fund may invest or otherwise have exposure to. Such risks may arise in respect
of the company itself, its affiliates or in its supply chain. While not
exhaustive, the below are examples of the risks that the Investment Manager
seeks to assess:
* Lack of diversity at board or governing body level: the absence of a
diverse and relevant skillset within a board or governing body may result in
less well informed decisions being made. The absence of an independent
chairperson of the board, particularly where such role is combined with the
role of chief executive officer, may hamper the board’s ability to exercise
its oversight responsibilities, challenge and discuss strategic planning and
performance, input on issues such as succession planning and executive
remuneration and otherwise set the board’s agenda.
* Inadequate external or internal audit: ineffective or otherwise
inadequate internal and external audit functions may increase the likelihood
that fraud and other issues within a company are not detected and/or that
material information used as part of a company’s valuation and/or the
Investment Manager’s investment decision making is inaccurate.
* Bribery and corruption: the effectiveness of a company’s controls to
detect and prevent bribery and corruption both within the company and its
governing body and also its suppliers, contractors and sub-contractors may
have an impact on the extent to which a company is operated in furtherance of
its business objectives.
* Lack of scrutiny of executive pay: failure to align levels of executive
pay with performance and long-term corporate strategy in order to protect and
create value may result in executives failing to act in the long-term interest
of the company.
* Poor safeguards on personal data/IT security (of employees and/or
customers): the effectiveness of measures taken to protect personal data of
employees and customers, and, more broadly, IT and cybersecurity, will affect
a company’s susceptibility to inadvertent data breaches and its resilience
to “hacking.”
ESG 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 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
organisation 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
organisation’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 maximise 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 organisation, the Ladies of Hope Ministries
(“LOHM”), an organisation 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 organisation 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
19 April 2024
Directors’ Report
Directors
The Directors of the Company during the year and to the date of this Report
are as listed on this Annual Report.
Directors’ Interests
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 2023.
Huw Evans held 5,000 shares as at 31 December 2023.
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 2023 through their joint Retirement Annuity Trust Scheme (RATS).
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 year 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. Following discussions with shareholders following the AGM in June
2023, it has been agreed that Mr. Targoff will not stand for re-election to
the Board at the AGM in May 2024, but he will continue to attend Board and
relevant Committee meetings as an observer.
Since the year end, the Board has announced the appointment of Dimitri
Goulandris and Liad Meidar as directors to take place as soon as practicable.
Their CVs are set out below. Mr. Goulandris and Mr. Meidar have been
introduced by Third Point, but the Board has satisfied itself after due
enquiries, including taking references using Cornforth Consulting, that they
are independent of the Investment Manager and they have each confirmed to the
Board that they understand the responsibilities of directors to act solely in
the interest of the Company and thus of all Shareholders. They, together with
Richard Boléat, will be the members of the Strategy Committee to be formed by
the Board.
Dimitri Goulandris
Dimitri Goulandris set up and runs The Cycladic Group, an investor in, and
creator of businesses. Founded in 2002 to invest capital on behalf of his
family and other investors, Cycladic has invested in over 60 businesses across
the world, and founded eight in Europe, the US, India, Africa and Latin
America. Cycladic works closely with its investee partners to help them
develop and then achieve ambitious goals. Companies controlled by Cycladic
have revenues of over $100 million and are growing rapidly. Mr. Goulandris
counts Premier Logistics (India), Gemini Equipment & Rentals (India),
Knightsbridge School, London and Knightsbridge Schools International (Malta)
among the companies that he has founded.
In addition to founding businesses, Mr. Goulandris is also an active board
member and investor in a number of businesses. In this capacity, he chairs
several exciting emerging companies, including Plain English Finance Limited,
Anemoi Marine Technologies and Talk Education, where Cycladic is typically the
largest and most-active non-founder investor. He also holds significant stakes
in a number of small public companies where he can be an influential and
active shareholder.
Mr. Goulandris previously set up and managed The Cycladic Catalyst Fund, an
investment fund focused on taking significant active positions in publicly
quoted small cap companies and driving strategic change to create value for
shareholders. He previously set up and ran the European operations of the
private equity firm, Whitney & Company, and spent eight years at Morgan
Stanley in its private equity group, structuring derivative products and
executing mergers and acquisitions both in New York and in London.
Mr. Goulandris received a Master’s degree in Electrical and Electronics
Engineering from Cambridge University and an MBA from Harvard Business School.
Liad Meidar
Liad Meidar is Founder and Managing Partner of Gatemore Capital Management,
where he serves as portfolio manager of the turnaround and activist strategy.
Mr. Meidar is also co-founder of GVP Climate, a subsidiary of Gatemore focused
on early-stage clean technology investing.
In 2005, Mr. Meidar founded Gatemore as an investment advisor serving high net
worth families and corporate defined benefit pension funds. As part of that,
he served as chief investment officer of the Gatemore Multi-Asset Fund (GMAF),
an open-ended, highly diversified fund which aimed to provide institutional
investors access to high Sharpe ratio returns though a single vehicle. Under
his watch, the GMAF won numerous industry awards, including UK Pensions DB
Multi-Asset Manager of the Year, the FT Pension and Investment Provider
Multi-Asset Fund Manager of the Year, and Pensions Age Multi-Asset Manager of
the Year. In 2020, Gatemore sold its investment advisory business along with
its management of the multi-asset fund.
In 2015, Mr. Meidar started Gatemore’s turnaround and activist strategy,
taking highly concentrated positions in listed small- and mid-caps across the
consumer, industrial, media, and technology sectors, and engaging with
management, boards of directors, and fellow shareholders to achieve
significant recoveries in shareholder value. In 2018, Gatemore launched a
co-mingled fund to house the strategy, the Gatemore Special Opportunities
Fund, for which Mr. Meidar serves as the portfolio manager.
In 2021, Mr. Meidar formed GVP Climate as a subsidiary in partnership with its
Chairman and CIO, Brett Olsher, to invest in early-stage clean technology
companies. Mr. Meidar is currently a board member of three Gatemore portfolio
companies: GSE Worldwide, Inc., a fully integrated talent management and
sports agency where he is Chairman; Factorial, Inc., developer of a
breakthrough solid-state battery technology; and SurvivorNet, Inc., an
oncology-focused digital media and pharma services company.
Mr. Meidar serves on the Dean’s Advisory Council at Princeton University and
on the Board of Trustees of the American School in London. He received an AB
in economics from Princeton University.
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 year.
Name Scheduled Board Meetings Attended Audit Committee Meetings Attended
Richard Boléat 4 of 4 4 of 4
Rupert Dorey1 4 of 4 n/a
Huw Evans 4 of 4 4 of 4
Vivien Gould 4 of 4 4 of 4
Joshua L Targoff1 4 of 4 n/a
Claire Whittet 4 of 4 4 of 4
1 Mr. Dorey and Mr. Targoff are not members of the Audit Committee.
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. When determining
remuneration levels of the Directors, the Committee 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 cognisant 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, which require companies to
report against the following:
* At least 40% of individuals on the Board are women;
* At least one senior Board position is held by a woman; and
* At least one individual on the Board is from a minority ethnic background
As an externally managed investment trust, with no Chief Executive Officer or
Chief Financial Officer, the Board considers that the Chair of the Company,
the Senior Independent Director and the Chair of the Audit Committee to be
senior positions. The role of Senior Independent Director is held by a woman,
Claire Whittet.
As at 31 December 2023, the Company did not meet the target of at least 40% of
the individuals on its board of directors being women, nor at least one
individual on its board of directors being from a minority ethnic background.
Since the financial year end, the Company has announced the appointment of Mr.
Goulandris and Mr. Meidar as directors of the Company as soon as practicable.
As set out in the Chairman’s Statement, these new directors will be members
of the Strategy Committee alongside Mr. Boléat. The Strategy Review requires
a very particular skill set, including experience in markets, mergers and
acquisitions and asset management, which Mr. Goulandris and Mr. Meidar
possess. The Board envisages that, on completion of the Strategy Review and
after consideration of its recommendations and the initiation of any
appropriate steps for implementation, the composition and size of the Board
would be reviewed. As succession planning of the Board progresses, the Company
will seek to achieve the requirements on board diversity targets.
Number of Percentage of Number of senior
Gender identity Board Members the Board positions on the Board
Men 4 66.6% 2
Women 2 33.3% 1
Number of Percentage of Number of senior
Ethnic background Board Members the Board positions on the Board
White British or other 6 100% 3
other White (including
minority white Groups)
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 evaluation process was undertaken during the year,
using Lintstock, an independent third-party agency, and the evaluation
concluded in November 2023. The results of the evaluation confirmed that the
Chairman continues to lead the Board in a proactive and effective manner. It
also confirmed that the Committees of the Board were rated highly, operating
to a high standard. The Directors are satisfied from the results that the
Board has the appropriate balance of skills and experience for the effective
management of the Company. No material weaknesses or concerns were reported.
Key priorities for the Board over the coming year were identified as
considering strategic issues and shareholder engagement.
For the year ending December 2024, the Board will be evaluating the
performance of the Board, Committees, individual Directors and third-party
service providers using a structured questionnaire without recourse to an
external facilitator.
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 has adopted a substantial buyback
programme under which the Company has bought back approximately $250 million
worth of its stock in the four year period to September 2023. Despite this,
the discount has remained stubbornly high and the Company is now offering
shareholders the opportunity to tender 25% of their stock at a discount of 2%
to NAV. This Redemption Offer is expected to be completed in June 2024. The
Company will not repurchase any of its Shares for the duration of the
Redemption Offer. Once the results of the Redemption Offer have been
announced, the Company may repurchase up to US$20m of Shares over the balance
of 2024 if, in the Board’s view, it is in the best interests of the Company
and Shareholders to do so;
* Concentration of the Investor Base. 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;
* 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 been concerned over the year under review that the Investment
Manager has found it difficult to produce competitive performance although
improved performance at the end of 2023 and into 2024 has been encouraging;
* 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;
* Geopolitical and economic risk. The Investment Manager monitors local and
international risks and adjusts the portfolio of investments in the Master
Fund accordingly;
* Valuation of investments. The valuation of the Company’s investment in
the Master Fund is confirmed by the Administrator of the Master Fund, is
checked by the Investment Manager and is reviewed as part of the Company’s
annual audit. The Board makes enquiries of the Investment Manager to satisfy
itself that there are satisfactory controls in place over the valuation
processes within the Master Fund and the Master Partnership. The accounts of
the Master Fund and the Master Partnership are both subject to annual audit;
and
* 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.
It is expected that the principal risks and uncertainties listed above will
apply to the Company for a minimum of the next six months. However, the Board
will be carrying out a Strategy Review over the balance of 2024 and, depending
on the outcome of this exercise, it is possible that the principal risks and
uncertainties may change.
Significant Events
In May 2023, the Third Point Master Fund (Master Fund) announced a change to
its redemption policy to accommodate the comparative illiquidity in its legacy
Privates portfolio. This was introduced to allow the Investment Manager to
manage the underlying portfolio more effectively, permitting it to offer a
more stable platform for investors while enhancing investor exposure to its
core strategies and competencies. From the end of June 2023, redemptions from
the Master Fund are being settled with approximately 93% in cash and 7% in
participation notes, the latter representing redeeming investors’ pro rata
share of Privates in the Master Fund. Over time, the Company’s holding of
participation notes will increase as Master Fund shares are redeemed to fund
expenses, the Company’s buyback programme and, in due course, any Redemption
Offers. Any realisation of Privates via the participation notes will be
reinvested in the Master Fund and will reduce the Company’s percentage
exposure to Privates.
On 2 June 2023, the Company terminated its two-year $150 million credit
facility without penalty ahead of its maturity in August 2023.
On 22 September 2023, the Company announced an extension to its buyback
programme authorising up to a further $25 million for buybacks over the period
to April 2024. During the year ended 31 December 2023, a total of almost 2.6
million shares were repurchased under the buyback programme with a value of
approximately $51.2 million, at a weighted average discount to NAV of 18.2%.
On 2 April 2024, the Board announced a Redemption Offer to shareholders under
which they will have the opportunity to tender up to 25% of their shares at a
discount of 2% to the NAV as at 30 April 2024. The Redemption Offer is
expected to be completed in June 2024.
On 9 April 2024, the Board announced the appointment of Dimitri Goulandris and
Liad Meidar as Directors to take place as soon as practicable.
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 2023.
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 sixteenth Annual General
Meeting was held on 7 June 2023 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 16 April 2024, 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) Limited 5,355,577 22.16%
Chase Nominees Limited 2,996,167 12.40%
Vidacos Nominees Limited 2,833,852 11.73%
BBHISL Nominees Limited 1,722,261 7.13%
Signed on behalf of the Board by:
Rupert Dorey
Chairman
Huw Evans
Director
19 April 2024
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
Chairman
Huw Evans
Director
19 April 2024
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 Committee
The Board has appointed a Nomination and Remuneration Committee and the
independent directors act as this committee. Vivien Gould is Chair of the
Committee. The 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.
Remuneration Policy
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 be sufficient to attract, retain and
motivate directors of quality required to run the Company successfully. Fees
for the Directors are determined by the Board within the limits approved by
shareholders. The maximum limit currently is £500,000 in aggregate per annum.
Directors’ fees are reviewed annually, 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.
Directors are entitled to be reimbursed for any reasonable expenses properly
incurred by them in connection with the performance of their duties and
attendance at board and general meetings and committee meetings.
There are no long-term incentive schemes provided by the Company and no
performance fees are paid to Directors.
Directors do not have service contracts with the Company. Each Director 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 Company’s Articles of Association. Should Shareholders vote against a
Director standing for re-election, the Director affected will not be entitled
to any compensation.
Component Parts of the Directors’ Remuneration
Year ended Year ended
31 December 2023 31 December 2022
£ £
Chairman’s base fee 76,000 76,000
Non-Executive Director base fee 48,000 48,000
Additional fee for the Senior Independent Director 3,000 3,000
Additional fee for the Chairman of the Audit Committee 9,000 9,000
Additional fee for the Chairman of the Management
Engagement Committee 3,000 3,000
Additional fee for the Chairman of the Nomination
and Remuneration Committee 3,000 3,000
It is the Company’s policy that the Chairman, Senior Independent Director
and Chairman of the Committees be paid higher fees to reflect their additional
responsibilities.
Prior to the year end, the Nomination and Remuneration Committee carried out a
review of the level of fees. Directors’ fees were last increased in January
2022. Following the annual review, which included reviewing Directors’ fees
against those of the Company’s peer group of investment companies, supported
by a review of published research by Nurole Limited and Trust Associates
Limited, it was concluded that there would be no increase in Directors’ fees
at present.
Directors’ fees
The fees payable by the Company in respect of each of the Directors who served
during 2023 and 2022, were as follows:
2023 2022
£ £
Richard Boléat (Management Engagement Committee Chairman) 51,000
42,500
Rupert Dorey (Chairman)1 76,000 76,000
Huw Evans (Audit Committee Chairman) 57,000 57,000
Vivien Gould (Nomination and Remuneration Committee Chairman) 51,000
42,500
Joshua L Targoff2 – –
Claire Whittet (Senior Independent Director) 51,000 51,000
Total 286,000 269,000
USD equivalent US$356,091 US$331,634
1 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. Bates’
resignation on 22 December 2021, that Mr. Dorey be duly recompensed.
2 As a non-independent Director and as a Partner of the Investment Manager
Joshua L Targoff waived his Directors’ fee.
Performance
The financial highlights detail the share price returns over the year.
Signed on behalf of the Board by:
Rupert Dorey
Chairman
Huw Evans
Director
19 April 2024
Report of the Audit Committee
We present the Audit Committee (the “Audit Committee”) Report for the year
ended 31 December 2023, 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.
The tenure of the current members of the Committee is set out below.
Date of Appointment Next Date
Name of Audit Committee Member to Audit Committee 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
Directors’ Report sets out the number of Audit Committee meetings held
during the year ended 31 December 2023 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 2023.
Ernst & Young LLP also provided UK reporting fund status 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 2023 is reasonable. The
Financial Statements of the Master Fund and the Master Partnership for the
year ended 31 December 2023 were audited by Ernst & Young LLP in the US who
issued an unmodified audit opinion dated 18 March 2024.
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 2023
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 UK reporting fund status services 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 2023 and 31 December 2022.
2023 £ Total 2022 £ Total
Audit Services 95,000 85,000
Non-audit Services – interim review and UK reporting fund status services* 62,316 57,316
* Non-audit services in 2023 includes a £7,316 UK reporting fund status
service fee (2022 £7,316) 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, 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 Chris Matthews who is in his first
year in the role.
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
19 April 2024
INDEPENDENT AUDITOR’S REPORT
Opinion
We have audited the financial statements of Third Point Investors Limited (the
“Company”) for the year ended 31 December 2023 which comprise the
Statement of Assets and Liabilities, the Statement of Operations, the
Statement of Changes in Net Assets, the Statement of Cash Flows and the
related notes 1 to 14, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation
is applicable law and accounting principles generally accepted in the United
States of America.
In our opinion, the financial statements:
► give a true and fair view of the state of the Company’s
affairs as at 31 December 2023 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 2025 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, the Redemption Offer
announced on 09 April 2024 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 2025.
In relation to the Company’s reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement
is not a guarantee as to the Company’s ability to continue as a going
concern.
Overview of our audit approach
Key audit matters ► Investment Valuation ► Investment Existence and Ownership
Audit scope ► We performed an audit of the complete financial information of the Company for the year ended 31 December 2023.
Materiality ► Overall materiality of US$12.8m which represents 2% of net assets.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation
of performance materiality determine our audit scope for the Company. This
enables us to form an opinion on the financial statements. We take into
account size, risk profile, the organisation of the Company and effectiveness
of controls, including controls and changes in the business environment and
the potential impact of climate change 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 2023.
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.
Risk Our response to the risk Key observations communicated to the Audit Committee
Valuation of investments (US$634m, PY comparative US$822m) Refer to the Report of the Audit Committee; Accounting policies). The investments held are measured at fair value through profit or loss, and their fair value is determined by reference to the published NAV per share of the investee fund, as calculated by its independent Administrator. The valuation risk considers the risk of an error in the application of the published NAV per share, obtained from the independent Administrator of the investee fund, when calculating the fair value of the Company’s investments, as well as the effect on valuation of any gating/suspension of redemptions by the investee fund. Our response comprised of substantive audit testing of the investment valuation, including: ► Agreeing the valuation per share We confirm that there were no matters identified during our work on valuation of investments that we wanted to bring to the attention of the Audit Committee.
of the Company’s investments in the investee fund to the NAV per share of the investee fund in the confirmation obtained from
its independent Administrator; ► Agreeing the valuation per share of the Company’s investments in the investee fund to the NAV
per share of the investee fund per its audited financial statements for the year ended 31 December 2023, which were approved on
18 March 2024; ► Directing Ernst & Young in New York to perform testing on our behalf and reporting that no material adjustments
to the NAV were required; and ► Reviewing the subscriptions and redemptions schedule of the investee fund around the year-end
date to assess the liquidity of the Company’s investments in the investee fund.
Investment existence and ownership (US$634m, PY comparative US$822m) Refer to the Report of the Audit Committee; Accounting policies. Risk that the investments presented in the financial statements do not exist or the Company does not have the rights to cash flows derived from them. Failure to obtain good title exposes the Company to significant risk of loss. Our response comprised the performance of substantive audit testing of investment existence and ownership including: ► Obtaining We confirm there were no matters identified during our audit work on existence and ownership of investments that we wanted to bring to the attention of the Audit Committee.
a confirmation, as at 31 December 2023, of the Company’s holdings in the investee fund into which the Company invests, from the
independent Administrator of the investee fund, and agreeing it to the accounting records of the Company; and ► Agreeing
supporting documentation for all additions and disposals of holdings in the investee fund that took place during the year ended
31 December 2023 and agreeing the details to the accounting records of the Company.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of
the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Company to be US$12.8million (2022:
US$13.5million), which is approximately 2% (2022: 2%) of net assets. We
believe that net assets provide 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% (2022: 75%) of our planning materiality, namely US$9.6m
(2022: US$10.2m). 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$0.6m (2022: US$0.7m), which is
set at 5% (2022: 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,
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;
► Directors’ explanation as to its assessment of the
Company’s prospects, the period this assessment covers and why the period is
appropriate;
► Director’s statement on whether it has a reasonable
expectation that the Company will be able to continue in operation and meets
its liabilities;
► Directors’ statement on fair, balanced and understandable;
► Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks;
► The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and;
► The section describing the work of the audit committee.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion. The
extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud
rests with both those charged with governance of the Company and management.
► We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and determined that the most
significant are:
* 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;
* Obtaining relevant written representations from the Board of Directors; and
* Performing journal entry testing.
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 seventeen years, covering the years ending 31 December 2007
to 31 December 2023.
* 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.
Christopher James Matthews, FCA
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
19 April 2024
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
2023 2022
Notes US$ US$
Assets
Investment in Third Point Offshore Fund Ltd at fair value 628,751,973 822,440,287
(Cost: US$340,474,153; 31 December 2022: US$425,367,214)
Investment in Participation Note 3 5,005,646 -
Cash and cash equivalents 190,603 64,597
Due from broker 12,538 11,944
Redemption receivable 4,258,882 6,121,484
Other assets 81,405 79,388
Total assets 638,301,047 828,717,700
Liabilities
Accrued expenses and other liabilities 330,194 344,792
Loan facility 4 - 149,425,845
Loan interest payable - 2,101,177
Administration fee payable 3,187 3,007
Total liabilities 333,381 151,874,821
Net assets 637,967,666 676,842,879
Number of Ordinary Shares in issue 7
US Dollar Shares 25,089,924 27,666,789
Net asset value per Ordinary Share 9, 12
US Dollar Shares $25.43 $24.46
Number of Ordinary B Shares in issue 7
US Dollar Shares 16,726,618 18,444,526
The financial statements were approved by the Board of Directors on 19 April
2024 and signed on its behalf by:
Rupert Dorey
Chairman
Huw Evans
Director
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund Ltd. and Third Point Offshore Master Fund L.P.
Statement of Operations
For the year ended 31 December
2023 2022
Notes US$ US$
Realised and unrealised gain/(loss) from investment transactions allocated from Master Fund
Net realised (loss)/gain from securities, derivative contracts and foreign currency translations (18,804,101) 58,236,092
Net change in unrealised gain/(loss) on securities, derivative contracts and foreign currency translations 25,304,602 (326,475,586)
Net gain from currencies allocated from Master Fund 181,370 3,118,956
Total net realised and unrealised gain/(loss) from investment transactions allocated from Master Fund 6,681,871 (265,120,538)
Net investment gain allocated from Master Fund
Interest income 27,705,576 38,342,786
Dividends, net of withholding taxes of US$1,090,325; (31 December 2022: US$1,102,843) 3,596,783 2,572,298
Other income 2,136,533 995,033
Stock borrowing fees (208,393) (841,041)
Investment Management fee (7,923,740) (10,295,508)
Dividends on securities sold, not yet purchased (1,452,886) (2,322,396)
Interest expense (10,288,315) (5,090,386)
Other expenses (2,152,415) (2,891,319)
Total net investment gain allocated from Master Fund 1 11,413,143 20,469,467
Company expenses
Administration fee 5 (128,497) (138,382)
Directors' fees 6 (356,091) (331,634)
Other fees (861,214) (1,129,755)
Loan interest expense 4 (5,218,020) (7,328,928)
Expenses paid on behalf of Third Point Offshore Independent Voting Company Limited 2 (111,940) (83,087)
Total Company expenses (6,675,762) (9,011,786)
Net gain 4,737,381 11,457,681
Net increase/(decrease) in net assets resulting from operations 11,419,252 (253,662,857)
1 Net gain/(loss) components allocated from the Master Fund are inclusive of
gain/loss on the underlying activity of the Participation Notes.
2 Third Point Offshore Independent Voting Company Limited consists of Director
Fees, Audit Fee and General Expenses.
See accompanying notes and Audited Financial Statements of Third Point
Offshore Fund Ltd. and Third Point Offshore Master Fund L.P.
Statement of Changes in Net Assets
For the year ended 31 December
2023 2022
Notes US$ US$
Increase/(decrease) in net assets resulting from operations
Net realised (loss)/gain from securities, commodities, derivative contracts and foreign currency translations allocated from Master Fund (18,804,101) 58,236,092
Net change in unrealised gain/(loss) on securities, derivative contracts and foreign currency translations allocated from Master Fund 25,304,602 (326,475,586)
Net gain from currencies allocated from Master Fund 181,370 3,118,956
Total net investment gain allocated from Master Fund 11,413,143 20,469,467
Total Company expenses (6,675,762) (9,011,786)
Net increase/(decrease) in net assets resulting from operations 11,419,252 (253,662,857)
Increase in net assets resulting from capital share transactions
Share redemptions 7 (50,294,465) (126,736,786)
Net assets at the beginning of the year 676,842,879 1,057,242,522
Net assets at the end of the year 637,967,666 676,842,879
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
2023 2022
Notes US$ US$
Cash flows from operating activities
Operating expenses (878,393) (1,452,090)
Interest paid (6,735,881) (5,020,348)
Directors' fees (356,091) (331,634)
Administration fee (128,317) (138,761)
Third Point Independent Voting Company Limited¹ (111,940) (83,087)
Change in investment in the Master Fund 158,336,628 6,624,925
Cash inflow/(outflow) from operating activities 150,126,006 (400,995)
Cash flows from financing activities
Credit facility repayment (150,000,000) -
Cash outflow from financing activities (150,000,000) -
Net increase/(decrease) in cash 126,006 (400,995)
Cash and cash equivalents at the beginning of the year 64,597 465,592
Cash and cash equivalents at the end of the year 190,603 64,597
1 Third Point Offshore Independent Voting Company Limited consists of Director
Fees, Audit Fee and General Expenses.
2023 2022
Notes US$ US$
Supplemental disclosure of non-cash transactions from:
Operating activities
Subscriptions (54,429,821) -
Redemption of Company Shares from Master Fund 7 104,724,286 126,736,786
Receipt of Participation Note 5,181,538 -
Financing activities
Share redemptions 7 (50,294,465) (126,736,786)
Amortisation of loan cost 574,155 862,415
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 2023
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 2023, 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. The Investment Manager has granted a management fee
discount of 0.50% on the indirect portion of the Company's interest that is
invested in Legacy Private Investments. This 0.50% discount also applies to
the Company's management fee on their Participation Note balance. 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$nil (31 December 2022: US$nil) of incentive fees
at the Master Fund level for the year ended 31 December 2023.
3. Significant Accounting Policies
Basis of Presentation
These 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 2023. 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 2023.
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 2023, 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$105,358,341 (505,045 shares)
for the cancellation of the Company shares under the share buyback programme.
The Company also redeemed US$155,840,000 (868,683 shares) to pay Company
expenses and to repay the loan facility. During the year the Company recorded
a noncash subscription of US$54,429,821 (544,298 shares) for expected future
redemption needs.
The following schedule details the movements in the Company’s holdings in
the Master Fund over the year.
Shares held at 1 January 2023 Shares Rolled Up Shares Transferred In Shares Transferred Out Shares Issued Shares Redeemed Share adjustments* Shares held at 31 December 2023 Net Asset Value Per Share at 31 December 2023** Net Asset Value at 31 December 2023
Class YSP - 1.25, Series 1 490,000 — — — — (490,000) — — — —
Class YSP - 1.25, Series 1-1 2,077,599 — — — — (548,872) (18) 1,528,709 343.84 525,635,128
Class YSP - 1.25, Series 1-2 22,699 — — — — (22,699) — — — —
Class YSP - 1.25, Series 1-3 451 — — — — (451) — — — —
Class YSP - 1.25, Series 1.4 441,000 — — — — — (5) 440,995 78.50 34,616,564
Class YSP - 1.25, Series 1.5 450,000 — — — — — (5) 449,995 74.64 33,589,202
Class YSP - 1.25, Series 2. 49,000 — — — — — (1) 48,999 78.50 3,846,250
Class YSP - 1.25, Series 2-1 53,839 — — — — (53,839) — — — —
Class YSP - 1.25, Series 2-2 50,000 — — — — — (1) 49,999 74.64 3,732,100
Class YBSP-125, Series 1 — — — — 197,860 (197,860) — — — —
Class YBSP-125, Series 2 — — — — 114,725 (76,481) — 38,244 108.81 4,161,429
Class YBSP-125, Series 3 — — — — 231,713 — — 231,713 100.00 23,171,300
Total 628,751,973
* Share adjustments relate to transfers from the portion of shareholders'
capital attributable to Legacy Private Investments.
** Rounded to two decimal places.
A portion of the Company’s investment in the Master Fund redemptions after 1
June 2023 redemption were satisfied through the issuance of Participation
Notes (the “Notes” or each a “Note”) in lieu of cash. Interests in the
Master Fund prior to 1 June 2023 are subject to the Note issuance upon
redemption. The Master Fund issued Notes through Third Point Offshore Fund
Vehicle, Ltd. (the “Issuing Entity”), which holds interests in the Notes
issued by the Master Partnership that are described in further detail in the
Master Partnership’s financial statements and are considered to be a Level 3
investment per the fair value hierarchy. The Company has elected to carry the
Notes at fair value. The Notes have no stated maturity date and as payments in
respect of the Notes issued by the Master Partnership are made to the Issuing
Entity, payments will be made to the Company to satisfy their outstanding Note
balances. During the year ended 31 December 2023 no payments were made. The
investment in Participation Note balance as of 31 December 2023 was
US$5,005,646. Losses on the Participation Notes during the year were $175,892.
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 2023, the Company’s US Dollar shares represented 16.1% (31 December
2022: 15.6%) of the Master Fund’s NAV.
The Company has adopted ASU 2015-07, Disclosures for Investments in Certain
Entities that calculate Net Asset Value per Share (or its equivalent) (“ASU
2015-07”), in which certain investments measured at fair value using the net
asset value per share method (or its equivalent) as a practical expedient are
not required to be categorised in the fair value hierarchy. Accordingly the
Company has not levelled applicable positions.
Uncertainty in Income Tax
ASC Topic 740 “Income Taxes” requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Company’s tax
returns to determine whether the tax positions are “more- likely-than-not”
of being sustained by the applicable tax authority based on the technical
merits of the position. Tax positions deemed to meet the
“more-likely-than-not” threshold would be recorded as a tax benefit or
expense in the year of determination. Management has evaluated the
implications of ASC 740 and has determined that it has not had a material
impact on these Audited Financial Statements.
Income and Expenses
The Company records its proportionate share of the Master Fund’s income,
expenses and realised and unrealised gains and losses on a monthly basis. In
addition, the Company accrues interest income, to the extent it is expected to
be collected, and other expenses.
Use of Estimates
The preparation of 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 can be converted to cash to meet liabilities in respect
of, for example, Company expenses and the buyback programme, as they fall due.
In addition, the Company has committed to hold a Redemption Offer for 25% of
NAV, at a discount of 2% to NAV. The Redemption Offer is expected to be
completed in June 2024. On the assumption that the Redemption Offer is fully
subscribed, this would imply further redemptions from the Master Fund of
approximately $156 million. The Company has begun the process of redeeming
shares in the Master Fund to satisfy the cash requirement of the Redemption
Offer in order to stay within the investor level redemption limit of 25% each
quarter.
The Board has announced that it will carry out a Strategy Review over the next
six months. At the conclusion of the Strategy Review, the Strategy Committee
will present its findings to the Board. If approved by the Board, the outcome
will then be reported by the Board to Shareholders, and any recommended new
proposals will be put to Shareholders, and voted on by them as appropriate. On
the assumption that the Committee is able to identify a positive direction for
the Company, which is approved by Shareholders, the Company will continue into
the future.
On that basis, after due consideration, and having made due enquiry of Third
Point, 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 2025.
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, interpretations or amendments
that have been issued but are not yet effective. The amendments and
interpretations which apply for the first time in 2023 have been assessed and
do not have an impact on the Audited Financial Statements.
Credit facility
The Company accounted for the credit facility as a liability, initially
recognised at the amount drawn less any related costs. Issuance costs were
amortised and recognised as additional interest expense over the life of the
loan. At each balance sheet date, the liability was adjusted for the repayment
of principal, accrual of interest and amortization of issuance costs. The
credit facility was fully repaid as of 2 June 2023.
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 allowed the Company to borrow $150 million at a rate of
LIBOR plus 2.4% for a period of two years. The investment in the Master Fund
serves as the security for the credit facility. The credit facility was fully
drawn by 31 December 2021 and the proceeds were invested in shares in the
Master Fund. The credit facility was fully repaid on 2 June 2023.
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. These expenses were fully amortised when the facility was repaid.
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$128,497 (31
December 2022: US$138,382) with US$3,187 outstanding (31 December 2022:
US$3,007) 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 and amounted
to US$111,940 (31 December 2022: US$83,087). As at 31 December 2023 expenses
accrued by the Company on behalf of VoteCo amounted to US$42,039 (31 December
2022: US$11,728).
6. Directors’ Fees
At the AGM in July 2020 Shareholders approved an annual fee cap for the
directors as a whole of £500,000.
The Directors’ fees during the year amounted to £286,000 (31 December 2022:
£269,000) with £nil outstanding (31 December 2022: £nil) at the year-end.
The current fee rates for the individual Directors are as follows;
Name Fee per annum
Chairman £76,000
Audit Committee Chairman £57,000
Director £48,000
Senior Independent Director £3,000
Chairman of the Management Engagement Committee £3,000
Chairman of the Nomination and Remuneration Committee £3,000
The Directors are also entitled to be reimbursed for expenses properly
incurred in the performance of their dutiesas Director.
7. Stated Capital
The Company was incorporated with the authority to issue an unlimited number
of Ordinary Shares (the “Shares”) with no par value and an unlimited
number of Ordinary B Shares (“B Shares”) of no par value.
Number of Ordinary Shares US Dollar Shares
Shares issued 1 January 2023 27,666,789
Shares Cancelled
Shares cancelled during the year (2,576,865)
Total shares cancelled during the year (2,576,865)
Shares in issue at end of the year 25,089,924
US Dollar Shares
US$
Net assets at the beginning of the year 676,842,879
Shares Cancelled
Share value cancelled during the year (50,294,465)
Total share value cancelled during the year (50,294,465)
Net increase in net assets resulting from operations 11,419,252
Net assets at end of the year 637,967,666
Number of Ordinary B Shares US Dollar Shares
Shares in issue as at 1 January 2023 18,444,526
Shares Cancelled
Shares cancelled during the year (1,717,908)
Total shares cancelled during the year (1,717,908)
Shares in issue at end of the year 16,726,618
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.
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
with the order of a further $50 million allocated to buybacks in the
subsequent 12 months and again in September 2023 with up to a further $25
million for buybacks over the period to April 2024. 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 2023,
the Master Partnership held 213,276 shares of the Company. These shares were
subsequently cancelled in January 2024.
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 2023, other investment funds owned by or affiliated with the
Investment Manager owned 5,705,443 (31 December 2022: 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
In May 2023, the Third Point Master Fund (Master Fund) announced a change to
its redemption policy to accommodate the comparative illiquidity in its legacy
Privates portfolio. This was introduced to allow the Investment Manager to
manage the underlying portfolio more effectively, permitting it to offer a
more stable platform for investors while enhancing investor exposure to its
core strategies and competencies. From the end of June 2023, redemptions from
the Master Fund are being settled with approximately 93% in cash and 7% in
participation notes, the latter representing redeeming investors’ pro rata
share of Privates in the Master Fund. Over time, the Company’s holding of
participation notes will increase as Master Fund shares are redeemed to fund
expenses, the Company’s buyback programme and, in due course, any Redemption
Offers. Any realisation of Privates via the participation notes will be
reinvested in the Master Fund and will reduce the Company’s percentage
exposure to Privates.
On 2 June 2023, the Company terminated its two-year $150 million credit
facility without penalty ahead of its maturity in August 2023.
On 22 September 2023, the Company announced an extension to its buyback
programme authorising up to a further $25 million for buybacks over the period
to April 2024. During the year ended 31 December 2023, a total of almost 2.6
million shares were repurchased under the buyback programme with a value of
approximately $51.2 million, at a weighted average discount to NAV of 18.2%.
On 2 April, 2024 the Board announced a Redemption Offer to shareholders under
which they will have the opportunity to tender up to 25% of their shares at a
discount of 2% to the NAV as at 30 April 2024. The Redemption Offer is
expected to be completed in June 2024.
There were no other events during the financial year outside the ordinary
course of business which, in the opinion of the Directors, may have had an
impact on the Audited Financial Statements for the year ended 31 December
2023.
12. Financial Highlights
The following tables include selected data for a single Ordinary Share in
issue at the year-end and other performance information derived from the
Audited Financial Statements.
US Dollar Shares
31 December 2023
US$
Per Share Operating Performance
Net Asset Value beginning of the year 24.46
Income from Operations
Net realised and unrealised gain from investment transactions allocated from
Master Fund 0.35
Net gain 0.18
Total Return from Operations 0.53
Share buyback accretion 0.44
Net Asset Value, end of the year 25.43
Total return before incentive fee allocated from Master Fund 3.97%
Total return after incentive fee allocated from Master Fund 3.97%
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 2023 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$
Per Share Operating Performance
Net Asset Value beginning of the year 32.37
Income from Operations
Net realised and unrealised gain 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 2023
US$
Supplemental data
Net Asset Value, end of the year 637,967,666
Average Net Asset Value, for the year1 631,249,876
Ratio to average net assets
Operating expenses2 (4.55%)
Total operating expenses2 (4.55%)
Net gain3 0.75%
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 asset value for the year.
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 year1 793,974,457
Ratio to average net assets
Operating expenses2 (3.84%)
Total operating expenses2 (3.84%)
Net gain 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 asset value for the year.
13. Ongoing Charge Calculation
Ongoing charges for the year ended 31 December 2023 and 31 December 2022 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 2023 and 31 December 2022 excluding
performance fees and including performance fees are based on Company expenses
and allocated Master Fund expenses outlined below.
31 December 2023 31 December 2022
Excluding performance fees
US Dollar Shares 1.92% 1.98%
Including performance fees
US Dollar Shares 1.92% 1.98%
14. Subsequent Events
As at 31 December 2023, the Master Partnership held 213,276 shares of the
Company – these shares were subsequently cancelled in January 2024.
On 2 April 2024, the Board announced a Redemption Offer to shareholders under
which they will have the opportunity to tender up to 25% of their shares at a
discount of 2% to the NAV as at 30 April 2024. The Redemption Offer is
expected to be completed in June 2024.
On 9 April 2024, the Board announced the appointment of Dimitri Goulandris and
Liad Meidar as Directors to take place as soon as practicable.
The Directors confirm that, up to the date of approval, which is 19 April
2024, 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.
ADDITIONAL INFORMATION
Investor Information
Financial Calendar
Year end 31 December.
Annual results announced and Annual Report published in April.
Annual General Meeting held in May/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)*
Richard Boléat*
Huw Evans*
Vivien Gould*
Joshua L Targoff
Claire Whittet*
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 3QL,
Channel Islands.
* These Directors are independent.
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
Deutsche Numis
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 2024 Annual General Meeting of 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 28 May 2024 at 10:30am BST (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 2023.
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 2023.
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 Claire Whittet as a Director of the Company.
8. To re-elect Richard Boléat as a Director of the Company.
9. To re-elect Vivien Gould as a Director of the Company.
10. To elect Dimitri Goulandris as a Director of the Company.
11. To elect Liad Meidar as a Director of the Company.
Special Business to be proposed as Special Resolutions:
12. 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: 1. 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;
2. ii. the minimum price (exclusive of expenses) which may be paid for a Share shall be $0.01;
3. the 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;
4. 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
5. 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
22 April 2024
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
23 May 2024 (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 & International
Limited’s specifications and must contain the information required for such
instruction, as described in the CREST Manual (available via
www.euroclear.com). 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 2 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 & International 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).
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 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.
Unless otherwise indicated on the Form of Proxy, CREST or any other electronic
voting instruction, the proxy will vote as they think fit or, at their
discretion, withhold from voting.
Explanatory notes:
Resolutions 1 to 11 will be proposed as Ordinary Resolutions and each will
require the approval of not less than 50 per cent. of those members present
and voting, whether in person or by proxy, in order to be passed.
Resolution 12 will be proposed as a Special Resolution and will require the
approval of not less than 75 per cent. Of those members present and voting,
whether in person or by proxy, in order to be passed.
Ordinary Resolution 1 seeks Shareholder ratification of the Annual Report and
Audited Financial Statements of the Company for the year ended 31 December
2023. The Annual Report provides a detailed overview of the Company’s
performance over the financial year ended 31 December 2023 and a projected
outlook for the present financial year.
Ordinary Resolution 2 seeks Shareholder ratification of the Directors’
Remuneration Report as detailed in the Annual Report and Audited Financial
Statements of the Company for the year ended 31 December 2023. The
Directors’ Remuneration Report describes how the Board has applied the
principles relating to Directors’ remuneration and the amount each
individual Director received for the financial year ended 31 December 2023.
Ordinary Resolutions 3 and 4 seek to re-appoint Ernst & Young LLP as the
Company’s auditor and to authorise the Directors to determine the
auditor’s remuneration. Members are required to approve the appointment of
the Company’s auditor to hold office until the next annual general meeting
of the Company and to give Directors the authority to determine the
auditor’s remuneration. Ernst & Young LLP has expressed their willingness to
continue as auditor to the Company.
Ordinary Resolutions 5 to 9 propose the re-election of Rupert Dorey, Huw
Evans, Claire Whittet, Richard Boléat and Vivien Gould as Directors. Each of
these Directors is experienced in the running of the Company and each chairs
one of the Board Committees. Consequently each makes an important contribution
to the Company’s long term success.
Ordinary Resolutions 10 and 11 propose the election of Dimitri Goulandris and
Liad Meidar following their appointments to the Board. These new directors
will be members of the Strategy Committee which requires a very particular
skill set, including experience in markets, mergers and acquisitions and asset
management, which Mr. Goulandris and Mr. Meidar possess.
Josh Targoff is stepping down at the AGM and not standing for re-election.
Biographical details for the Directors are contained within the Annual Report.
Special Business to be proposed as a Special Resolution:
Special Resolution 12 seeks to renew the authority granted to the Directors
pursuant to section 315 of the Companies Law, enabling the Company to make
market purchases (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). The Board will use the repurchase
authority to assist in managing any excess supply in the market and demand for
the Company’s Shares thereby seeking to reduce the volatility of any
discount.
This authority will expire at the conclusion of the next annual general
meeting of the Company or on a date which is 18 months from the date of
passing of this resolution (whichever is earlier) and it is the present
intention of the Directors to seek a similar authority annually.
RECOMMENDATION
The Board considers that the proposals and subjects of all the resolutions are
in the best interests of the shareholders as a whole. Accordingly, the Board
recommends to members that they vote in favour of all of the resolutions to be
proposed at the forthcoming Annual General Meeting.
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 categorised 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 recognised 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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