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Hedge fund manager Daniel Loeb is facing the challenge of his frustrated investor to find out how he is managing his investment vehicle in the UK.
Known for his campaigns against the management of companies like Loeb, Sony and Sotheby’s, he has targeted Asset Value Investors, a London-based 10.1 per cent stake in Third Point Investors Ltd..
TPIL is an investment bond managed by Loeb, which floated on the London Stock Exchange in 2007 and trades at a 17.5 per cent discount to the value of its stake.
AVI on Wednesday published a letter complaining about performance and governance in TPIL, saying a review of the latest strategy to close the discount said it “unfortunately lacks the structural changes we believe are necessary”.
The public followed a webinar with investors in February. This, according to AVI, Loeb said would not squeeze shareholders “in the long-term interests of all our investors in an attempt to force them to turn their backs or try to force the board or do something other than me”.
Activist investors like Loeb, who build stakes in companies and spark a desire for change, have often been criticized for the short term.
AVI CEO Tom Treanor said Loeb’s comments were “significant because of hypocrisy and a lack of self-awareness.” Treanor claimed the five-minute tape, including Loeb’s most scathing notes, was then cut from a recording of a call extended to investors.
“The Third Point suggests cutting those comments from the official recording, either Mr. Loeb was embarrassed by his lack of professionalism and unwillingness about his shareholder rights and corporate governance, or his marketing team was embarrassed by his boss,” he said.
AVI, which manages the 1.2 billion euro AVI Global trust, is well known for buying vehicles that trade at a discount among London investment trusts and then trying to push management to close the gap, which increases the value of AVI’s holdings.
“TPIL’s management is committed to its shareholders and, as the latest strategic review shows, values their feedback,” the company said in a statement to the Financial Times.
TPIL, which has total assets of about $ 900 million, allows investors to access Loeb’s Third Point Offshore hedge fund.
The UK’s investment trust structure was set up by Loeb in 2007 amid a rush by fund managers to raise more sustainable capital, as investors often agreed to block their money for years. Other hedge fund managers, including Bill Ackman’s Pershing Square and Brevan Howard, followed.
AVI’s campaign focuses on the permanent discounting of TPIL’s share price over several years compared to net assets. According to data from Morningstar, it averaged 16 percent last year.
TPIL management completed a strategic review in April to address the decline. The commission has offered investors the opportunity to withdraw money through a bidding bid in 2024 if confidence is still negotiating with a significant discount. They also plan to increase the fund’s exposure to private capital, from the current level by about 7 percent to 20 percent.
AVI believes that the TPIL should change the structure by encouraging investors to hold a quarterly meeting to amortize their shares at prices close to the net asset value and to measure the measure.
Rising markets have boosted TPIL shares, with a decline from near the widest point of near 30% last year, and the share price is the highest ever.
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