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AVI asks Third Point Investors to tackle its discount

AVI asks Third Point Investors to tackle its discount – Asset Value Investors, managers of AVI Global Trust, have written to the directors of Third Point Investors, the London-listed hedge fund, to ask them to convene a general meeting at which a resolution would be put to shareholders:

THAT the existing investment policy of the Company (as set out in the annual report and audited financial statements of the Company for the year ended 31 December 2020) be changed as set out below, with the proposed changes being shown in blackline:

Investment Objective and Policy

The Company’s investment objective is to provide its Shareholders with consistent long term capital appreciation together with periodic opportunities for Shareholders to realise their investment in the Company (as described below) utilising the investment skills of Third Point LLC (the “Investment Manager”, “Manager” or “Firm”), through:

(a) investment of all of its capital (net of short-term working capital requirements and save as set out below) in Class E and N Shares of Third Point Offshore Fund, Ltd. (the “Master Fund”), an exempted company formed under the laws of the Cayman Islands in October 1996: and

(b) the redemption of such Class E and N Shares to finance Redemption Opportunities (as defined below).

The Master Fund is a limited partner of Third Point Offshore Master Fund L.P. (the “Master Partnership”), an exempted limited partnership organised under the laws of the Cayman Islands, of which Third Point Advisors II L.L.C., an affiliate of the Investment Manager, is the general partner. Third Point LLC is the Investment Manager to the Company, the Master Fund and the Master Partnership. The Master Fund and the Master Partnership have the same investment objectives, investment strategies and investment restrictions.

The Master Fund and Master Partnership’s investment objective is to seek to generate consistent long-term capital appreciation, by investing capital in securities and other instruments in select asset classes, sectors, and geographies, by taking long and short positions. The Investment Manager’s implementation of the Master Fund and Master Partnership’s investment policies is the main driver of the Company’s performance.

The Investment Manager identifies opportunities by combining a fundamental approach to single security analysis with a reasoned view on global, political and economic events that shapes portfolio construction and drives risk management.

The Investment Manager seeks to take advantage of market and economic dislocations and supplements us analysis with considerations of managing overall exposures across specific asset classes, sectors, and geographies by evaluating sizing, concentration, risk, and beta, among other factors. The resulting portfolio expresses the Investment Manager’s best ideas for generating alpha and its tolerance for risk given global market conditions. The Investment Manager is opportunistic and often seeks a catalyst that will unlock value or alter the lens through which the broad market values a particular investment. The Investment Manager applies aspects of this framework to its decision-making process, and this approach informs the timing of each investment and its associated risk.

The Company has substantially all of its holding in the Master Fund in share class N. This share class attracts a management fee of 1.50% and the Company also qualifies for an additional reduction in
the management fee applicable to it based on its size and longevity as an investor in the Master Fund. As a result, the Company pays a management fee of 1.25% per annum in share class N. The Class N share class is subject to a 25% quarterly investor level redemption gate.

The Company will on a periodic basis (at the discretion of the directors of the Company) offer Shareholders who wish to do so the opportunity (by way of tender offer, share buy-back or otherwise) to realise their Ordinary Shares at a price per Ordinary Share as near as possible to their underlying Net Asset Value per Ordinary Share (less related costs) (“Redemption Opportunities”).

In order to finance Redemption Opportunities the Company shall, as part of its investment policy, seek to redeem (subject to the quarterly investor level redemption gate and otherwise the constitution of the Master Fund) such numbers of its Class E and Class N Shares in the Master Fund as are necessary.

Any Ordinary Shares bought for the Company’s account (e.g. as part of the buyback programme) traded mid-month will be purchased and held by the Master Partnership until the Company is able to cancel the shares following each month-end. Shares cannot be cancelled intra-month because of legal and logistical factors. The Company and the Master Partnership do not intend to hold any shares longer than the minimum required to comply with these factors, expected to be no more than one month.”

[We appreciate that this is pretty complex. Basically, we think AVI is looking for a way to narrow Third Point Investor’s discount and failing that be offered an exit close to NAV. There is a letter that sets out more of AVI’s thinking behind this which can be read here.]

AGT / TPOU : AVI asks Third Point Investors to tackle its discount

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