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The Morning Brief: Third Point Cuts Fees...for Third Point
Daniel Loeb’s Third Point has cut the fees for one of its largest clients. The New York hedge fund firm has reduced the management fee charged to Third Point Reinsurance to 1.5 percent from 2 percent. However, it is retaining the 20 percent performance fee. The arrangement is good for five years, according to a press release.
Loeb created Third Point Re mostly to provide permanent capital for his hedge funds. Bermuda-based Third Point Reinsurance, which went public in August 2013, invests its premiums in the hedge funds. According to the reinsurer, since its inception and through the first quarter of 2016, Third Point has generated a 9.6 percent annualized return on its invested assets. Third Point Re’s stock, however, is down more than 17 percent this year.
Hedge fund favorite Dow Chemical plunged 2 percent after the chemical giant announced it would lay off 2,500 employees and shut down two plants. The stock is now down nearly 6 percent for the year. Loeb’s Third Point is the fifth-largest shareholder of Dow, which agreed to merge with DuPont in December. The deal is expected to close sometime in 2017. Third Point, which occasionally engages in shareholder activist battles, at one point mulled a possible proxy fight with the chemical company.
Xencor surged 32 percent on Tuesday, after the clinical-stage biopharmaceutical company -- another hedge fund favorite -- announced a collaboration agreement with drug giant Novartis. It also announced two new programs for the treatment of neuroendocrine tumors and multiple cancers. The largest shareholder of Xencor is Deerfield Management, a New York hedge fund firm that specializes in health care, while the second-largest shareholder is New York-based Perceptive Advisors, which specializes in biotechnology, pharmaceutical, medical device, diagnostics and health services companies.
New York-based Elliott Management bought 52,000 shares of cybersecurity company Imperva, boosting its stake to 10.9 percent.
Richard Perry’s Perry Capital has ended its relationship with healthcare company Universal American Corp. Perry’s hedge funds sold 3.3 million shares of non-voting stock and more than 7.7 million shares to the company. Under the agreement, all of the unvested restricted stock and outstanding options held by Perry were cancelled. In addition Perry resigned from the company’s board of directors. The stock, which has a roughly $600 million market capitalization, rose 1.24 percent on Tuesday.
Shares of hedge fund favorite Valeant Pharmaceuticals International surged nearly 7 percent, to close at $20. Even so, the stock is down 80 percent for the year.