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TPRE - Third Point Reinsurance


giofranchi

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  • 2 weeks later...
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  • 2 weeks later...

You think?  I tell you I keep waffling on this one/him.  I really don't like some of the e-mails and other stuff that came out in the fairfax short campaign.  It was just really unseemly and speaks to a lack of judgment in my view.  Although it seems like he has some good ideas.  Like Sotheby's seem's like a no-brainer if you can get some control/influence.  If he had no shorts and only long with hedges or long only, I would be more comfortable.

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Well I mean he writes these investor letters espousing all the merits of his investments as if he is a value investor. 

 

Nov 2013: Third point discloses $1 billion dollar position in Softbank.  Softbank stock was trading that quarter between 7000-8000 yen.  He pitches it at the Robin Hood conference as so:

 

Loeb met Son and was impressed by the Japanese billionaire’s leadership and prospects, the people said. Third Point likes SoftBank’s organic growth potential and investments in gamemaker GungHo Online Entertainment Inc. (3765) and Chinese e-commerce company Alibaba Group Holding Ltd., the people said.

 

Now his investment letter in Q4 2013:

 

Softbank is led by one of the world’s premier creators and compounders of value, Mr. Masayoshi Son, its founder and CEO.

 

And suddenly this:

 

We also took advantage of stronger tapes to exit or reduce positions including AIG, Hertz, Softbank, LNG, LNG AU, and Sony, which is discussed in more detail below.

 

That is only one example.  I mean Softbank didn't even move that much in price.  I swear, he is dumping half the positions he talks about in previous investment letters.  One letter even compared XON to QCOM in terms of the upside from a royalty business.  Of course in the next filing he is dumping shares.

 

He returns some cash from the fund because of limited opportunities then he goes and raises more than he gave back less than a year later.

 

I could go on but I just sense that he is more promotional and hype than substance. 

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Yeah the soft bank thing is really bipolar.  How much credit does he deserve for Yahoo's investment in BABA though?  Doesn't take many of those to justify your existence.  Also, he's probably not as much of a douche as Ackman or Einhorn.  Maybe just.  I like Icahn, Meister and Rachesky better, but they don't have any offshore reinsurers with a decent insurance man running that side of the shop.

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  • 2 weeks later...

http://www.thirdpointre.com/files/TPRE-Investment-Results_October_2014_v001_t4k43q.pdf

 

Not doing terribly well as I expected though.

From his latest shareholder letter, it sounds like he was smart enough to sell a bunch of stocks high and he repurchased many of those names at a lower price. Now that the overall stock market has gone up a lot in the past 2 weeks, I was expecting a big gain, but I was totally wrong. ::)

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http://www.thirdpointre.com/files/TPRE-Investment-Results_October_2014_v001_t4k43q.pdf

 

Not doing terribly well as I expected though.

From his latest shareholder letter, it sounds like he was smart enough to sell a bunch of stocks high and he repurchased many of those names at a lower price. Now that the overall stock market has gone up a lot in the past 2 weeks, I was expecting a big gain, but I was totally wrong. ::)

 

http://www.thirdpointre.com/files/2014-10-October-Monthly-Report-TPRE_v001_s6dl3p.pdf

 

More details are in. I am scratching my head here. He reduced equity exposure right before market tank in October, which is smart. His letters said he bought back these positions at lower prices, which is clearly not the case here.

 

Comparing with his master fund, the positions are clearly different. Why is that? ::)

http://www.thirdpointpublic.com/navshare-price/usd/

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Loeb went after WEB a little at the SALT conference (linked article below).  Loeb's criticism about him running a hedge fund misses the point.  Buffett's main bone of contention with the HF's is the 2 and 20, which he never took.  WEB also hammers the underperformance (esp. combined with the 2 and 20), which of course he didn't even remotely have a problem with.  Finally, taking credit for Japan starting to at least pay lip service to corporate reform?  Sheesh, I think I like Ackman more.

 

http://fortune.com/2015/05/06/dan-loeb-warren-buffett/

 

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And how Buffett switching from an LP to a corporation for the rest of his life's work keeps getting painted as "tax avoidance/evasion" is beyond me.

 

Yes, it is true that if you give all your wealth away and never sell a single share of stock - you will not owe tax.  You also can't spend any of it.  Meanwhile Berkshire is well on it's way to being the largest single tax payer in the country and will be every single year for eternity...

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  • 2 years later...

Rating agency A.M. Best warned Third Point Re, which is backed by Daniel Loeb’s Third Point LLC hedge fund, on its underwriting yesterday, saying that it is “concerned with the company’s trends in underwriting performance” as its underwriting portfolio failed to perform in 2016.

 

The rating agency said that it is looking for Third Point Re to “reverse course” on its underwriting performance, pushing the reinsurer to raise its underwriting returns to add to the investment side of the business which would make the model look more sustainable.

 

Should the underwriting performance deteriorate further, “it could place negative pressure on the rating,” A.M. Best said, warning that it will be monitoring the reinsurer closely.

 

Third Point Re fell to an underwriting loss in every quarter in 2016, which has concerned the rating agency it appears, despite this actually not being such a huge departure from the hedge fund backed or total return reinsurance strategy.

 

http://www.artemis.bm/blog/2017/03/29/third-point-re-told-to-reverse-course-on-underwriting-by-a-m-best/

 

This is one that I want to like but just haven't been able to.  Underwriting is blah to terrible and investment performance just okay.  Plus you have the huge fees to contend with on the investment side.  Still Loeb has pulled it out in the past and if they just can get the combined and investment returns together for a few quarters it could really soar.  Currently trading around 85% of book.

 

Underwriting continues to disappoint this year.  From Q1 2017:

 

Our combined ratio for the quarter was 106.3%, which was in line with expectations given current market conditions and the lines of business on which we focus.

 

http://www.thirdpointre.com/investors/financial-information/financial-reports/default.aspx

 

I will need some improvements to that combined ratio before I could consider it.  It honestly feels fairly to slightly over-priced given actual performance.

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