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 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.
|
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.
|
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 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.
|
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.
|
|
|
|
|
|
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
(Cost: US$340,474,153; 31 December 2022: US$425,367,214)
|
|
628,751,973
|
822,440,287
|
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$1,102,843)
|
|
3,596,783
|
2,572,298
|
Other
income
|
|
2,136,533
|
995,033
|
Stock borrowing
fees
|
|
(208,393)
|
(841,041)
|
Investment
Management fee
|
|
(7,923,740)
|
(10,295,508)
|
Dividends on
securities sold, not yet purchased
|
|
(1,452,886)
|
(2,322,396)
|
Interest
expense
|
|
(10,288,315)
|
(5,090,386)
|
Other
expenses
|
|
(2,152,415)
|
(2,891,319)
|
Total
net investment gain allocated from Master
Fund1
|
|
11,413,143
|
20,469,467
|
|
|
|
|
Company
expenses
|
|
|
|
Administration
fee
|
5
|
(128,497)
|
(138,382)
|
Directors'
fees
|
6
|
(356,091)
|
(331,634)
|
Other
fees
|
|
(861,214)
|
(1,129,755)
|
Loan interest
expense
|
4
|
(5,218,020)
|
(7,328,928)
|
Expenses paid
on behalf of Third Point Offshore Independent Voting Company
Limited2
|
|
(111,940)
|
(83,087)
|
Total
Company expenses
|
|
(6,675,762)
|
(9,011,786)
|
Net
gain
|
|
4,737,381
|
11,457,681
|
Net
increase/(decrease) in net assets resulting from
operations
|
|
11,419,252
|
(253,662,857)
|
1 Net gain/(loss)
components allocated from the Master Fund are inclusive of
gain/loss on the underlying activity of the Participation
Notes.
2 Third Point
Offshore Independent Voting Company Limited consists of Director
Fees, Audit Fee and General Expenses.
See
accompanying notes and Audited Financial Statements of Third Point
Offshore Fund Ltd. and Third Point Offshore Master Fund
L.P.
Statement
of Changes in Net Assets
For the
year ended 31 December
|
|
2023
|
2022
|
|
Notes
|
US$
|
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:
-
the maximum number of Shares
hereby authorised to be purchased shall be 14.99% of the issued
Ordinary share capital of the Company (excluding treasury shares)
as at the date of this Annual General Meeting;
-
ii. the minimum price
(exclusive of expenses) which may be paid for a Share shall be
$0.01;
-
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;
-
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
-
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.