Dan Loeb, who operates the Third Point hedge fund, has been a hot topic in the financial news lately. A big reason: He snagged a $1 billion-plus profit for his investment in Yahoo (YHOO).
Of course, he continues to be busy minting other nice opportunities, including an upcoming IPO of Third Point Reinsurance, a Bermuda-based property and casualty insurance operator. The company plans to issue 22.2 million shares at a range of $12.50 to $14.50. It intends to list on the New York Stock Exchange under the ticker of “TPRE.”
Loeb was one of the founding investors of TPRE, which got its start back in late 2011 with an initial capital commitment of about $785 million.
TPRE is a reinsurance company, which means it covers the exposures for other insurance firms. Right now, its main focus is in the U.S., but the company intends to move in foreign markets soon. So long as there is effective risk management, the available capital for investing can be substantial — which is how Loeb’s savvy can make a big difference. For example, the Third Point Partners L.P. fund has clocked a compounded annualized return of about 21% since 1995.
According to the S-1:
“Third Point LLC has historically favored event-driven situations, in which it believes that a catalyst, either intrinsic or extrinsic, will unlock value or alter the lens through which the greater market values a particular investment.”
In 2011, Loeb hired a top-notch executive, John Berger, to run the day-to-day operations. He has roughly three decades of experience in the reinsurance industry. So far, so good — last year, net income came to $99.4 million, and the company is sitting on $74.4 million in profits for Q1 2013.
No doubt, TPRE is still in its early days, and yes, the industry is risky. But with a large capitalization, a strong growth ramp and Loeb’s enviable track record, investors likely will want a piece of this IPO.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.