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Alternative Market Briefing

Q&A with Joe Taussig of Taussig Capital on Third Point Re's IPO

Monday, August 19, 2013

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Joe Taussig
Matthias Knab, Opalesque:

Third Point Re’s shares began trading on the New York Stock Exchange Thursday last week. While the 22 million shares offered in its IPO priced at $12.50 per share, which was the low of its range, 14 million shares traded on the first day and two million traded on Friday, where it closed at $13.30 per share, up 6.5% and a 10% premium to book value (Greenlight Re trades at an 11.7% premium to book value while Swiss Re, XL, Axis, AWACS, and Validus all trade at discounts to book value).

Recently, Joe Taussig of Taussig Capital appeared on Opalesque TV and told us why 14 major asset managers (including Buffett, Soros, Einhorn, Loeb, Cohen, and AQR) had acquired or started reinsurance companies. We asked him for his thoughts on the Third Point Re IPO.

Taussig: Pricing an IPO is always more of an art than a science. It appears that the investment bankers got it more or less right. The day it priced, there were fears that the Fed would ease off on its bond buying. As such, the S&P 500 dropped 2% the two days that TPRE has traded. Consequently, the pricing and amount were at the low of its range.

Despite these head winds, nearly 2/3rds of the offering trading on the first day and 10% on the second day, and it appears that price discovery at around $13......................

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