Investing

Dan Loeb's Third Point Explores Potential Acquisition of SiriusPoint, Two Years After Its Listing

Povozniuk / iStock via Getty Images

Shares of SiriusPoint (US:SPNT) look set to extended Wednesday’s more-than-10% gain as investors mull the potential of Third Point LLC acquiring the company. The activist fund, run by Daniel Loeb, currently owns 9.34% of the stock.

Loeb’s Third Point believes that SiriusPoint’s management team, led by its CEO, is taking the necessary steps to position the company for long-term success and is supportive of the current strategy and plan being pursued. However, they think SiriusPoint may be better positioned to execute its turnaround strategy as a privately held company. Third Point anticipates that the acquisition price that they intend to deliver will be generally consistent with the industry’s recent precedent transaction valuations.

SiriusPoint issued a press release acknowledging Third Point’s interest in exploring the acquisition of the company. The firm’s board of directors stated that they would evaluate any proposal to acquire the company carefully. The company welcomed dialogue with investors and said that they share the common goal of maximizing value for all shareholders.

Making Progress

SPNT management highlighted in the release that they have made significant progress in the last seven months toward its strategic priorities of reducing volatility, business simplification, and improving profitability. Management reiterated that its capital position has been further strengthened by the recently announced Loss Portfolio Transfer transaction which aided the Fitch outlook rating upgrade to Stable from Negative.

SiriusPoint is a Bermuda-based insurance and reinsurance company that may not be well known to the public, but has already taken a significant boost from the news of the potential acquisition. As Loeb, the investor who plans to acquire SiriusPoint, himself sits on the company’s board, the acquisition may not be difficult to accomplish.

SiriusPoint first listed in 2021 when Third Point’s own Reinsurance company merged with Sirius International Insurance Group. Loeb believes that SiriusPoint’s turnaround plan is likely to be best served by going private to strengthen its financial position, enhance its credit ratings further, and adhere to the highest regulatory standards. Insurance companies are drawing a lot of interest from fund managers due to their ability to stand up during economic downturns.

Options Sentiment

When analysing investor sentiment on the Fintel platform for SPNT we noticed a significantly deteriorating Put/Call options sentiment indicator over the last year for the stock. This ratio has risen from a positive read of 0.4 in May 2022 to more than 6.4 currently. This ratio tells us that there are currently over 6x more bearish bets for the stock in the market than bullish bets.

This indicator analyzes all disclosed open put and call options positions in the market over time to determine the magnitude of bullish and bearish investment orders that are in play over time.

The potential acquisition of SiriusPoint could be a positive outcome for investors depending on the price. The company’s shares have struggled to perform, and the acquisition could provide a catalyst for change. If the acquisition is successful, SiriusPoint will have access to the resources of Third Point and its affiliates. The investment fund’s experience in the insurance industry could help SiriusPoint to execute its turnaround strategy successfully.

Institutions Interested

Research from the Fintel platform highlighted SPNT has attracted above average levels of institutional buying activity during the first quarter of 2023. The Fintel Fund Sentiment Score of 68.72 ranks SPNT in the top ~30% out of 36,228 globally screened securities.

There are a total of 358 institutions on the register that collectively own 94.09 million shares or about 58.56% of the total float. The share ownership has grown 6.68% during the quarter.

This article originally appeared on Fintel

The #1 Thing to Do Before You Claim Social Security (Sponsor)

Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.

A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.