Third Point Investors Ltd - Third Point Releases Q4 2023 Investor Letter
15 Février 2024 - 8:00AM
UK Regulatory
Third Point Investors Ltd - Third Point
Releases Q4 2023 Investor Letter
PR Newswire
LONDON, United Kingdom, February 15
15 February 2024
Third
Point Q4 2023 Investor Letter
Third
Point LLC, the Investment Manager of Third Point Investors Limited
(“TPIL”
or the “Company”)
announces it has published its quarterly investor letter for Q4
2023. The full letter can be accessed at the Company’s
website:
https://www.thirdpointlimited.com/resources/portfolio-updates.
Highlights:
-
The Master
Fund generated a 7.6% gain in the Fourth Quarter, with
contributions from equity longs, risk arbitrage, and corporate
credit offset modestly by equity shorts and hedges.
-
Most of
the major detractors during the first and second quarters rebounded
in the second half of the year, which, along with successful risk
arbitrage positions in Activision Blizzard and US Steel, resulted
in equity returns above the benchmark indices for the
period.
-
The
Investment Manager sees a constructive backdrop for both equities
and credit in 2024, as it continues to find high-quality companies
trading at reasonable valuations.
Performance
Key Points:
-
Third
Point LLC (“Third
Point” or the
“Investment
Manager”)
returned 7.6% in the flagship Offshore Fund (the
“Master
Fund”) during
the fourth quarter of 2023.
-
The top
five positive contributors for the quarter were Bath & Body
Works Inc., Microsoft Corp., Pacific Gas & Electric Co.,
Amazon.com Inc., and United States Steel Corp.
-
The lowest
five contributors for the quarter, excluding hedges, were Regal
Rexnord Corp., Hertz Global Holdings Inc., Option Care Health Inc.,
Veralto Corp., and Global Blue Group Holding AG.
Outlook
and Market Commentary:
-
Third
Point’s actions in 2023 to improve performance involved significant
analysis and scrutiny of not just what it invests in, but how it
invests. On the long equity side, deep fundamental conviction has
enabled the Investment Manager to see investments through, even
when markets or factors cause temporary underperformance. This
conviction grounded Third Point as some of its main long positions
were underperforming earlier in the year but contributed to the
strong performance in the second half of the year and
Q4.
-
On the
short side, Third Point identified that its hit rate on identifying
alpha shorts was excellent, but that its monetisation of those
ideas had been suboptimal, in part due to extreme volatility which
caused the manager to shorten duration. Third Point addressed this
by restructuring its single name short portfolio to be far more
diversified across industry, market capitalisation, and factor
profile, while tightly limiting risk in names with high short
interest. This revised strategy yielded significantly better and
lower volatility returns in the second half of the
year.
-
Credit,
meanwhile, remained a consistent driver of returns, with strong
results from both corporate and structured credit.
-
While
assets have certainly priced in some of the good macroeconomic news
on inflation and rates, Third Point still believes headline equity
market multiples exaggerate the valuation most companies are
trading for. The manager expects returns to be driven by:
- 1) a more
stable interest rate environment, which should create more
event-driven opportunities;
- 2) Third
Point’s duration as a holder, which will continue to be a benefit
in complex event-driven situations and mispriced quality companies;
and
- 3)
executing on its playbook in opportunistic credit investing, with
increasing opportunities to act as a liquidity provider during
times of heightened stress.
Portfolio
Updates
-
Corporate
Credit Update
- First half
performance was driven by successful investments in cruise lines
and in regional banks and CS/UBS debt securities during the March
selloff. Second half performance was driven by exposure to
healthcare and telecom sectors.
- Looking
ahead to 2024, Third Point believes that technical and fundamental
factors are conspiring to increase supply in high yield at a time
when companies will experience more balance sheet stress, making
credit an attractive asset class for an extended
period.
-
Structured
Credit Update
- Third
Point’s structured credit portfolio also delivered quality,
risk-adjusted returns in 2023, with each of the individual
strategies within the portfolio positive except marketplace
loans.
- The
largest contributor to performance was the Master Fund’s exposure
to residential mortgage securities, and the Investment Manager
remains constructive on the asset class. While the manager expects
some price declines if rates fall and housing turnover increases,
there is still a significant amount of home equity in borrowers’
hands.
- Looking
forward, Third Point expects to be able to take advantage of bank
stress, as these financial institutions look to offload loans to
shore up balance sheets. Spreads in structured credit also look
attractive versus public corporate credit, and Third Point expects
to see a strong bid for these assets as more investors seek them
out.
Business
Update - Senior Appointments at the Investment
Manager
-
Third
Point’s Chief Compliance Officer, William
Song, left the firm earlier in February. Over the past
fifteen years, Will created and oversaw a robust compliance
program, drawing on his prior experience at the Securities &
Exchange Commission. Will stayed on through February to transition
his responsibilities to his Deputy, Jana
Tsilman, who has served in that role since 2017. We welcome
Jana to her new role as Chief Compliance Offer.
-
Chief
Marketing Officer Jenny Wood left
the firm at the end of 2023, marking the culmination of an orderly
transition following her decision to leave earlier in the year.
Jenny’s IR responsibilities have been assumed by Ryan Holland, Head of Investor Relations, who
joined us in 2020. On the Marketing side, Rich Arbucci, who has led private wealth
marketing since 2019, has taken on the role of Co-Head of
Marketing.
-
Marc Zwebner has returned to Third Point as Co-Head of
Marketing. Marc was Co-Head of Marketing and a Managing Director at
Third Point from 2009-2013. Most recently, he was the Global Head
of Business Development at Avenue Capital Group.
-
Finally,
Stoyan Hadjivaltchev has rejoined Third Point. Stoyan was on the
equities team from 2006-2008 and returned as a Managing Director
from 2012 to 2020. Stoyan will have a senior role across the
equities portfolio, helping to oversee idea generation, research,
portfolio construction, and talent development.
Press
Enquiries
Third
Point
Elissa
Doyle, Chief Communications Officer and Head of ESG
Engagement
edoyle@thirdpoint.com
Tel: +1
212-715-4907
|
Buchanan
Charles
Ryland
charlesr@buchanan.uk.com
Tel: +44
(0)20 7466 5107
Henry
Wilson
henryw@buchanan.uk.com
Tel: +44
(0)20 7466 5111
|
Notes
to Editors
About
Third Point Investors Limited
www.thirdpointlimited.com
Third
Point Investors Limited (LSE: TPOU) was listed on the London Stock
Exchange in 2007 and is a feeder fund that invests in the Third
Point Offshore Fund (the Master Fund), offering investors a unique
opportunity to gain direct exposure to founder Daniel S. Loeb’s
investment strategy. The Master Fund employs an event-driven,
opportunistic strategy to invest globally across the capital
structure and in diversified asset classes to optimize risk-reward
through a market cycle. TPIL’s portfolio is 100% aligned with the
Master Fund, which is Third Point’s largest investment strategy.
TPIL’s assets under management are currently $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 45-person
investment team, a robust quantitative data and analytics team, and
a deep, tenured business team. Third Point manages approximately
$10.6 billion in assets for sovereign
wealth funds, endowments, foundations, corporate & public
pensions, high-net-worth individuals, and employees.
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