‘Juvenile antics’: Third Point boss lashes out at ‘inexperienced’ activist investors as hedge fund’s chair is forced to step down
- Third Point say Bates had to resign after ‘threats’ raised ‘a business conflict’
- Follows a shareholder vote in which AVI and partners were defeated
- Third Point has been engaging privately with unhappy shareholders
Hedge fund veteran Daniel Loeb has labelled a major investor in his firm Third Point Investors as ‘shameful’, ‘underhanded’ and ‘inexperienced’ after they allegedly forced the resignation of its chairman.
New York-based Third Point’s Steve Bates was subjected to ‘personal threats’ and attacks, which raised ‘a business conflict’ for the chairman and therefore forced him to resign, the investment firm said.
It comes amid a spat between Third Point and London-based Asset Value Investors, as well as ‘other activist shareholders, including Staude Capital’, which have been engaging with the business recently following a shareholder vote result the investors disagreed with.
Third Point CEO Daniel Loeb has lashed out at ‘juvenile antics’ of some investors
The investors were part of a cabal that previously attempted to force the exit of general counsel Josh Targoff from Third Point’s board, but this motion was defeated by shareholders.
Following the vote, AVI and its partners pledged to engage with Third Point privately on the issue.
During engagement with AVI and others, according to Third Point, ‘one of the activists resorted to making personal threats against Steve Bates, namely that should he refuse to accede to their proposals, they would attack him in other business areas’.
Third Point, which manages roughly $17.3billion (£12.9billion), said this ‘raised a business conflict for Mr Bates’, because if he were to carry on as chair ‘he would be subject to behaviour which would impede the carrying out of all his responsibilities and duties, including those he owes to the company’.
The firm added: ‘Such personal threats have no place in relations between companies and shareholders and we greatly regret that we will lose Steve as such a valuable member of our board.’
Boss Loeb said in a statement that the resignation ‘is loss for all shareholders’, describing the alleged behaviour as ‘a stain on institutional investors who attempt to engage constructively with boards and management teams’.
He said: ‘Being a successful activist requires moving on when shareholders reject your plans rather than resorting to underhanded tactics. These juvenile antics smack of desperation and inexperience.’
At the crux of a long-running battle between Third Point and some investors is a row over the gap between the hedge fund’s share price and its net asset value.
A number of investors have raised grievances about a valuation discount between Third Point’s main fund and its London-listed feeder fund, while there are also governance concerns.
In a statement, an AVI spokesperson said: ‘We supported the appointment of Steve Bates to the board, and it is unfortunate that he has now chosen to resign.
‘However, we do not find it at all surprising that Steve felt unable to continue in the role.
‘We understand he has felt under pressure from the manager for the latter part of his tenure, and it has been disappointing to see the continued misleading narratives being put out under the board’s name.
‘In that vein, we note the continued claims in today’s statement from the company and manager that shareholders ‘rejected our recent motion framed as a proxy for the broad activist agenda, to remove a director’.’
AVI described this as ‘a gross distortion of reality’, as 52 per cent of shareholders and 75 per cent of shareholders independent of Third Point supported its resolution, ‘which was only defeated due to the votes controlled by the ‘VoteCo’ entity which owns no economic stake in the company’.
It added: ‘We continue to believe this raises serious questions around governance at the company. We will publish a more comprehensive statement in due course.’