January 30, 2020 / 9:34 PM / 19 days ago

Third Point presses Sony, takes stand against proposed SEC proxy adviser rule

BOSTON (Reuters) - Hedge fund Third Point on Thursday called on Sony Corp (6758.T) to keep divesting non-core assets and said it opposes the U.S. Securities and Exchange Commission’s proposed rule on proxy advisers.

The firm, run by Daniel Loeb, praised Sony for last year’s strong returns but said it needs to take a hard look at its portfolio, from which it has divested only Olympus.

“Sony has avoided the topic of portfolio optimization, but we continue to believe that Sony’s media and semiconductors franchises can stand alone and create more value independently than together,” the firm wrote in a letter to its investors. A copy was seen by Reuters.

The New York-based hedge fund is among the first, along with Carl Icahn, to oppose the SEC’s proposed rule for proxy advisory firms. The measure is designed to give investors more insight into how firms, including Institutional Shareholder Services and Glass Lewis & Co, formulate their recommendations on issues ranging from proposed mergers to executive pay.

Third Point’s flagship portfolio returned 18.6% last year and its investment bets are closely watched in the investment community, especially as most of last year’s gains were fueled by activist positions, including bets on Sony and Campbell Soup Co (CPB.N).

Pushing corporations to improve operations has helped fuel Third Point’s returns for nearly a decade, the letter said, adding that the strategy was becoming more valuable in a changing market environment.

Third Point began building a stake in Sony last year and called for a spinoff of its semiconductor unit. While praising Sony management for having listened to its ideas, it clearly wants things to move faster.

The fund also praised Campbell Soup Co’s (CPB.N) new Chief Executive Mark Clouse, the man it has said privately it helped recruit, for revitalizing the iconic brand. Third Point took some of its profits and now owns less than 5% of the company, leaving money on the table for new bets.

Third Point’s letter did not discuss any new investment ideas but it called the SEC’s proposed proxy adviser rule an “end run around shareholder rights.”

The rule would give corporations, many of whom have complained about the power and influence of ISS and Glass Lewis for years, the right to review recommendations before they are published.

Under the proposal, proxy advisers could be subject to lawsuits, even if companies had endorsed their recommendations.

Reporting by Svea Herbst-Bayliss; Editing by Sandra Maler and Tom Brown

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