Daniel Loeb faces his own taste of medicine in a UK investment trust dispute

Activist hedge fund manager Daniel Loeb faces the challenge of frustrated investors over how they manage their UK-listed investment instruments.

Known for campaigns against corporate operations such as Sony and Sotheby’s, Loeb finds that a London-based company is targeted by Asset Value Investors, which owns a 10.1% stake in Third Point Investors Ltd. It was.

TPIL is a Loeb-managed investment trust that was listed on the London Stock Exchange in 2007 and trades at a 17.5% discount on its holding value.

AVI released a letter on Wednesday complaining about TPIL’s performance and governance, and a recent strategic review said it was “extremely lacking in the structural changes we consider necessary” to close the discount. Stated.

According to AVI, Loeb said he wouldn’t give in to shareholders, saying, “I’m trying to make a quick profit by bullying or forcing the board or me to do something else.” For the long-term interests of all investors. “

Investors like Robe, an activist who invests in businesses and fuels change, have often been criticized for short-termism.

AVI Executive Director Tom Treanor said Loeb’s comments were “notable because of their hypocrisy and lack of self-awareness.” Treanor claimed that a five-minute tape containing Loeb’s sharpest remarks was cut from a recording of a call that was later distributed to investors.

“Third Point’s removal of these comments from official records was embarrassing for Mr. Loeb’s own expertise and unintended candidness in shareholder rights and corporate governance, or his marketing team bossed. It suggests that he was either embarrassed by. “

AVI, which operates the £ 1.2 billion AVI Global Trust, buys cars that trade at discounted prices among investment trusts in London and puts pressure on management to fill the gap, increasing the value of AVI’s holdings. It is famous for trying to raise it.

“The TPIL board welcomes shareholder engagement and, as recent strategic reviews show, we value their feedback,” the company said in a statement to the Financial Times.

With total assets of approximately $ 900 million, TPIL gives investors access to Loeb’s Third Point Offshore Hedge Fund.

The UK investment trust structure was founded by Mr. Loeb in 2007 as fund managers rushed to attract more permanent capital. Investors often agreed to lock cash for years. Other hedge fund managers such as Bill Ackman’s Persing Square and Brevan Howard followed.

At the heart of AVI’s campaign is the continuous discounting of TPIL’s stock price over its net worth for several years. According to Morningstar data, this gap has averaged 16% over the past year.

The TPIL Board of Directors signed a strategic review in April to address this discount. The board has proposed withdrawing cash to investors through a tender offer in 2024 if the trust is still trading at a significant discount. They also plan to increase the fund’s exposure to private equity from its current 7% to up to 20%.

AVI argues that TPIL needs to change the structure of TPIL to allow investors to redeem their shares at a price close to net asset value on a quarterly basis, and shareholders to consider this measure. We are asking you to hold a general meeting.

Due to the rise in the market, the stock price of TPIL has risen, and the price reduction has narrowed from the maximum of last year to nearly 30%, and the stock price has reached a record high.

Daniel Loeb faces his own taste of medicine in a UK investment trust dispute

Source link Daniel Loeb faces his own taste of medicine in a UK investment trust dispute

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