Daniel Loeb, manager of activist hedge funds, faces a challenge from a frustrated investor himself in a controversy over how to manage his listed investment vehicle in the UK.
Loeb, known for his campaigns against the management of companies such as Sony and Sotheby’s, has met the target of Asset Value Investors, a London-based company that holds a 10.1 per cent stake in Third Point Investors Ltd.
TPIL is an investment trust managed by Loeb that was floated on the London Stock Exchange in 2007 and which trades at a discount of 17.5 per cent for the value of its holdings.
AVI on Wednesday issued a letter complaining about the benefits and governance in TPIL, saying a recent strategy review fell “sadly short of the structural changes we believe are necessary” to close the discount.
The public sput follows a tense webinar with investors in February during which, according to AVI, Loeb said he could not hold shares “seeking to earn a quick buck by trying to intimidate or force the board or me to do something that is not in the long-term interests of all our investors. ”
Activist investors like Loeb, who are building stakes in companies and campaigning for change, have often been themselves criticized for the short term.
Tom Treanor, executive director of AVI, said Loeb’s comments were “remarkable for his hypocrisy and lack of self-knowledge.” Treanor said five minutes of tape, including Loeb’s loudest remarks, were cut from a call log after it was distributed to investors.
“Third Point’s excision of these comments from the official record suggests that Mr. Loeb was embarrassed by his own professionalism and an unforeseen candor regarding his views on shareholder rights and governance. corporate, or his marketing team was embarrassed by his boss, ”he said.
AVI, which manages the £ 1.2 billion AVI Global trust, is well known among London’s investment trusts for buying vehicles that trade at a discount and then trying to push management to close the gap, which which increases the value of AVI shares.
“TPIL’s board welcomes engagement with its shareholders and, as shown by our recent strategic review, appreciates their feedback,” the company said in a statement to the Financial Times.
TPIL, which has about $ 900 million in total assets, allows investors to access Loeb’s Third Point Offshore Offshore Hedge Fund.
The UK investment trust structure was set up by Loeb in 2007 amid a rush by fund managers to attract more permanent capital, with investors often agreeing to close their funds for years. . Other hedge fund managers, including Bill Ackman’s Pershing Square and Brevan Howard, have followed suit.
AVI’s campaign is based on the persistent discount of TPIL’s share price compared to its net worth for several years. The pit was 16 percent on average over last year, according to Morningstar data.
The TPIL board concluded a strategic review in April to address the discount. The council has offered to let investors cash in via a bid in 2024, if the trust is still trading at a substantial discount. They also plan to increase the fund’s exposure to private equity from its current level to about 7 percent to a limit of 20 percent.
AVI argues that TPIL should change its structure to let investors redeem its shares each quarter at prices close to the value of net assets and urge a general meeting to consider the measure.
Growing markets have boosted TPIL shares, with a discount restriction from its widest point close to 30 percent last year, and the stock price is at an all-time high.