In its interim half-year results, the board said today (22 September) it would continue its previously announced buyback programme, authorising up to a further $25m over the period to April 2024.
During the first half of 2023, the trust bought back approximately 1.2 million shares, equivalent to $23.7m in value, adding $0.18 to NAV. The board allocated a further $50m to buybacks in September last year, with $5m of the capacity unused.
Third Point Investors hit by long equity exposure in 'bruising' 2022
The board added it would hold tender offers in April 2024 and April 2027, each for 25% of the outstanding shares at a discount of 2%, if the discount is wider than 10% and 7.5%, respectively, in the preceding six-month periods.
If the 2024 tender is fully subscribed, and assuming no exits from the trust's private portfolio, its private exposure will increase to 12% from the current level of 8%, the board noted, which would increase further through buybacks.
In a research note, Numis analysts Ash Nandi and Gavin Trodd said they believe the upcoming discount triggered tender offer, for 25% of share capital at a 2% discount to NAV "may act as a catalyst for a rerating", supported by an extension to the funds buyback programme.
Poor performance
Third Point Investors, the £500m London-listed closed-ended fund, which invests directly in Daniel Loeb's flagship hedge fund, saw its NAV fall by 3.8% in the six months to June, compared to a 15.4% gain for the MSCI World index and a 16.9% rise for the S&P 500 index.
Share price total returns fell by 4.5%, as the trust's discount widened from 15.4% to 16.1%. According to the Association of Investment Companies, TPOU's has continued to widen to 18.7% at the time of writing.
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The trust's relative underweight to the "magnificent seven" tech stocks, namely Nvidia, Meta, Amazon, Apple, Microsoft, Google and Tesla, were key drivers of underperformance during the period.
Mark-to-market losses in high conviction event equity longs also contributed to poor performance, including Danaher, IFF and Bath & Body Works, as well as losses from companies exposed to the financial sector during the Silicon Valley Bank failure in Q1.
TPOU's short equity book and private portfolio detracted by 6.4%, with the latter affected by slight markdowns in later-stage venture capital positions.
Top performers in the portfolio were Microsoft, Salesforce, LVMH, Pacific Gas and Advanced Micro Devices, while the credit portfolio contributed a total of 2.6% gross returns.
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Third Point's net equity exposure remained between 45-50% during the period. Post period-end, however, net equity exposure has increased to 71.8%.
"Equity net exposure has been increased to over 60% more recently, incorporating a mix of potentially undervalued AI 'winners' and a diversified portfolio of event-driven positions that have defined catalysts in the next 12 to 18 months," said chair Rupert Dorey.
"While it has been a difficult period for performance, the investment manager believes that it has now positioned the portfolio to capitalise on a more positive macroeconomic view, which has been relatively consistent since the autumn of 2022."