Daniel S. Loeb

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Dan Loeb
Born Daniel Seth Loeb
(1961-12-18) December 18, 1961 (age 53)
Santa Monica, California, U.S.
Residence New York City, New York, U.S.
Nationality United States
Ethnicity Jewish
Alma mater Columbia University (B.A.)
Occupation Hedge fund manager
Known for Third Point Partners LLC
Net worth Increase US$ 2.2 billion (April 2014)[1]
Religion Judaism[2]
Spouse(s) Margaret Davidson Munzer (m. 2004)
Parents Ronald and Clare (née Spark) Loeb

Daniel Seth "Dan" Loeb (born December 18, 1961) is an American hedge fund manager. He is the founder and chief executive of Third Point LLC, a New York-based hedge fund with a portfolio worth $14 billion.[3]

New York has noted that Loeb's "preferred strategy" is to buy into troubled companies, replace inefficient management, and return the companies to profitability, which "is the key to his success."[2] In April 2014 his personal net worth was estimated at $2.2 billion,[1] compared with $1.5 billion the previous year.[4] "The only thing I care about ... is making money for my investors", he has said.[2]

Biography[edit]

Loeb, the son of Ronald and Clare (née Spark) Loeb,[5] grew up in Santa Monica, California, and attended Palisades Charter High School.[2][6][7] At the school, he took AP classes, started a skateboard company and was nicknamed "Milo Minderbinder" by one of his teachers (after a character in the novel Catch-22 who had a fascination with the stock market).[8] His father was a partner at the Los Angeles law firm of Irell & Manella LLP[6] and general counsel for Williams-Sonoma.[5] His mother is a historian.[5][6]

Loeb's great-aunt, Ruth Handler, created the Barbie doll and co-founded Mattel Inc.[6] In 2009, Loeb told an audience "[I] associated success in business with Hot Wheels and Barbie dolls. I think it was a very powerful enforcer early on to like business."[8]

Loeb attended the University of California at Berkeley for two years and subsequently graduated from Columbia University with an economics degree.[9] By his senior year at Columbia, he had made $120,000 in the stock market, but lost it all on an investment in a firm called Puritan-Bennett Inc. The loss taught him a lesson, he later said, in "overconcentrating positions".[8]

Early career[edit]

Loeb worked at Warburg Pincus, a private equity firm, from 1984 to 1987.[10][11] He next worked as director of corporate development at Island Records, a record label, where he focused on securing debt financing.[12] After Island Records, Loeb worked as a risk arbitrage analyst at Lafer Equity Investors and then, from 1991 to 1994, as senior vice-president in the distressed debt department at Jefferies LLC. At Jefferies, he focused on bankruptcy analysis, trading bank loans and selling distressed securities. He moved on to become a Citigroup vice president from 1994–95, in charge of high-yield bond sales.[10][11]

Third Point Management[edit]

Loeb started Third Point Management in 1995 "with $3.3 million from family and friends". Loeb appeared in the Forbes 2013 list of the world's 40 richest hedge-fund managers and traders.[4][13]

Letters[edit]

On Wall Street, Loeb has a reputation for "financial savvy" and for "his withering criticism of corporate executives who are unfortunate enough to stumble in his sights".[9] One of Loeb's signature tactics involves letter-writing:

Loeb is well known in Hedgeworld for his attacks on what he views as greedy execs who also happen to be depressing shareholder value. Of shares he owns. "The moral-indignation business", Loeb sometimes calls it.
Hedge-fund guys love to read Loeb’s attacks; "he articulates what people feel" says one.[2]

Often these letters cite the results of investigations he has ordered,[citation needed] detailing management decisions and actions he considers detrimental to shareholder value. Usually the letters accompany his government filings.[2] Loeb once spent more than $4 million to increase his stake in a company to more than 5%, the statutory threshold requiring investor filings with the SEC, in order to file one of his letters criticizing the firm's management.[2] According to New York magazine, "Loeb is proud of his letters, which are thorough, well argued, and filled with clever turns of phrase. (He had a batch prepared for his high-school English teacher.)"[2] A 2005 New Yorker "The Talk of the Town" item described him as "a kind of investor's H. L. Mencken."[14]

In a 2005 letter responding to a job inquiry by a U.K. fund manager Loeb bristled at the applicant's reference to his (the applicant's) "place in society", telling the applicant that he would "have plenty of time to discuss your 'place in society' with the other fellows at the club." At Third Point, Loeb explained, "'one's place in society' does not matter at all. We are a bunch of scrappy guys from diverse backgrounds (Jewish, Muslim, Hindu etc) who enjoy outwitting pompous asses like yourself in financial markets globally."[15] Similarly, in a September 2005 letter to Ligand Pharmaceuticals CEO David Robinson, Loeb expressed wonder that Ligand's board of directors had not shown Robinson "the door long ago – accompanied by a well worn boot planted in the backside."[15]

Loeb sent a letter to John Collins, chairman and CEO of InterCept, in 2004, accusing InterCept of following "a 'good ol' boy' set of ethics", pointing out that InterCept employed Collins' daughter and son-in-law, the latter of whom Loeb had recently reached by phone on a golf course during working hours. Loeb further noted his discovery that InterCept leased a jet from a partnership controlled by Collins and another board member.[15]

He wrote to Irik Sevin, CEO of Star Gas Partners, in February 2005, calling him "one of the most dangerous and incompetent executives in America" and accusing him of "ineptitude" and of using the firm as his "personal 'honey pot'". He wrote: "I was amused to learn, in the course of our investigation, that at Cornell University there is an 'Irik Sevin Scholarship'. One can only pity the poor student who suffers the indignity of attaching your name to his academic record." Loeb demanded the resignation from the firm's board of Sevin's "elderly 78-year old mum" and insisted that Sevin also "step down ... so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites."[15]

A 2005 New York Times article reported that many hedge-fund managers were now writing letters to the SEC demanding executives take specific actions and cited Loeb's letter to Sevin as exemplary of the genre, noting that three weeks after the letter was sent, "Sevin was gone, and a jubilant Mr. Loeb sent out an e-mail message to friends and associates declaring a 'huge victory for Third Point.'"[16]

Yahoo![edit]

In 2012, Loeb, who through Third Point LLC held 5.8% of Yahoo! stock, sought seats on the Yahoo! board for himself, former NBC Universal CEO Jeff Zucker, former Goldman Sachs executive Harry Wilson and former MTV Networks executive Michael J. Wolf.[17] On May 3, 2012, Loeb revealed that the new CEO of Yahoo!, Scott Thompson, did not have a computer science degree, as had been commonly assumed for many years.[18][19] Thompson resigned on May 13, 2012.[20] Reuters then announced that Loeb, Wilson and Wolf would become members of the Yahoo! board.[21]

Sony[edit]

In May 2013, Loeb proposed splitting Sony's entertainment and electronics businesses, arguing that such a split would increase profits.[22][23][24]

On June 18, 2013, Third Point LLC announced it had increased its stake in Sony to 70 million shares, or about 7 percent, valued at $1.4 billion.[25] According to Bloomberg.com, Sony's board of directors was considering Loeb's proposal and had hired Morgan Stanley and Citigroup, Inc. to evaluate it.[26]

Actor George Clooney, whose Smokehouse Pictures production company has a contract with Sony's entertainment division, publicly opposed the proposal.[27][28]

As of May 2014, Sony remained 12 percent lower than when Loeb first suggested for them to split. Sony had its sixth annual loss in seven years with shares dropping 8.8 percent as of May 2014. In February 2014, Sony said it would sell its PC business to buyout Japan industrial Partners Inc. and split its TV manufacturing unit into an independently operated entity. Ayano Iguchi, a company spokeswoman, said Sony was "focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the entertainment and financial service businesses." Chris Konstantinos, the director of international portfolio managements at RiverFront stated that a breakup was "long overdue."[29]

Sotheby's[edit]

In October 2013, Loeb issued a letter scrutinizing the governance of Sotheby's.[30] It announced that Third Point had acquired "9.3% of the outstanding shares" and addressed Third Point's concerns regarding the governance of Sotheby's. These concerns are summarized as, "we are troubled by the Company's chronically weak operating margins and deteriorating competitive position relative to Christie's, as evidenced by each of the Contemporary and Modern art evening sales over the last several years."[30] The letter expressed strong skepticism of Sotheby's international strategy—"Sotheby's is struggling internationally, lagging in newer markets like China and the Middle East"—and called for the removal of William Ruprecht from all his positions.[30]

After Sotheby's instituted a "poison pill" to stop Third Point from growing its position past 10%, Third Point brought a lawsuit in the state of Delaware; however, on May 3, 2014, Vice Chancellor Donald Parsons of the Delaware Court of Chancery ruled that the auction house was justified in its use of the corporate action. On May 5, Loeb and Sotheby's reached an agreement, stipulating that Loeb, Olivier Reza and Harry J. Wilson join the board in exchange for Third Point having an ownership cap at 15%. William Ruprecht would stay as CEO and a proxy contest to be concluded at Sotheby's AGM would cease.[31][32]

Philanthropy[edit]

The Daniel S Loeb Family Third Point Foundation[edit]

The Daniel S Loeb Family Third Point Foundation earned $6.39 million in profits in 2011 and had $4.45 million in assets at the end of that year, making it one of the largest and highest-earning private foundations. Its nonprofit administrative expense ratio, a measure of its operating and administrating expenses, was 0.44%, compared to the 2011 average of 19.7% for all private foundations.[33]

Education[edit]

Loeb is chairman of the board of Success Academy Charter Schools in Brooklyn.[4] He endowed the Daniel S. Loeb Scholarship for undergraduate study at Columbia University. Since 2004, he has been a trustee of Prep for Prep, an organization in New York City that prepares underprivileged children to attend competitive private schools. He is active in the Jewish Enrichment Center, which provides young people with an education in Judaism. Additionally, he is a co-founder of Students First New York, the state branch of the national education advocacy organization.[11]

On February 20, 2014, Loeb attended a discussion between the American Enterprise Institute and the Dalai Lama. The two worldviews debated the morality of capitalism and free enterprise. In Loeb's presentation, he said he practices Ashtanga yoga and applies yoga principles to his business and his decision-making. He noted that these principles aided in his decision to donate to a charter school in the Bronx, which is now ranked third in the state of New York.[34][35]

Human rights[edit]

In 2013, Loeb was a signatory to an amicus curiae brief submitted to the U.S. Supreme Court in Hollingsworth v. Perry, in support of same-sex marriage.[36][37][38][39]

Military[edit]

In October 2011, Loeb challenged three former Navy SEALs to run the "MightyMan" Half Iron Triathlon with him and his team in Montauk, New York. He made a sizable contribution for each Navy SEAL Foundation director who completed the triathlon to raise funds for the foundation.[40][41][42]

Medical research[edit]

In 2011, 2012, and 2013, Loeb and his wife made significant donations to the Alzheimer's Drug Discovery Foundation (ADDF), which funds over 400 Alzheimer’s drug discovery programs in academic centers and biotechnology companies in 18 different countries.[43][44][45]

Loeb and his wife have also donated to the Leukemia and Lymphoma Society, Ovarian Cancer Research Fund, Chai Lifeline, and the Michael J. Fox Foundation.[46]

Other[edit]

Loeb was co-chair of the Governors for Investors Industry (2013).[47] He is a trustee of Mount Sinai Hospital, the Manhattan Institute, the U.S. Olympic Committee and the Los Angeles Museum of Contemporary Art. He is a member of the Council on Foreign Relations and of the National Council of the American Enterprise Institute.[47]

Political activity[edit]

Loeb has donated to the Democratic Senatorial Campaign Committee, Friends for Harry Reid, Obama for America, Forward Together PAC, Prosperity PAC, Straight Talk America, and the Volunteer PAC.[10]

Art collection[edit]

Loeb and his wife are avid art collectors who have frequently appeared on Art News's annual list of 200 top art collectors. Art News describes them as specializing in postwar and contemporary art and in "feminist art".[48][49][50][51][52][53] "Loeb is a prominent art collector and the walls at his Park Avenue office are covered with paintings", according to a New York Times August 26, 2013 article.[54] At a Sotheby's auction in 2009, Manhattan dealer Larry Gagosian purchased Jeff Koons' Baroque Egg With Bow (Turquoise/Magenta) for $5.4 million from Loeb, who had bought it from the Gagosian Gallery in 2004 for about $3 million.[55]

Loeb has traced his love of art to his student years at Columbia, when he saw Poussin's The Rape of the Sabine Women at the Metropolitan Museum of Art and took an art humanities class as part of the core curriculum. The "prep school kids" treated him like a "jerk", thinking they "all knew so much more", but in the end "I got one of two A's, and all the prep school snotty kids didn't."[56]

Business Insider placed Loeb at the top of its list of "Wall Street's 25 Most Serious Art Collectors", noting he owns works by Mike Kelley, Richard Prince, Basquiat, Andy Warhol and Cindy Sherman, and that he “has his own curator.”[57]

Honors and awards[edit]

Loeb was recognized by New York Governor Andrew Cuomo in 2011 for his role in advocating for marriage equality legislation in New York State. In 2012, Columbia University presented Loeb with the John Jay Award for distinguished professional achievement.[47]

Personal life[edit]

Loeb married Margaret Davidson Munzer on July 4, 2004,[14] at his beach house in East Hampton, New York.[5] Loeb is a founding "Master Player" of Portfolios with Purpose, an annual virtual stock trading contest that raises money for charitable causes of the winning contestants' choice.[58]

Loeb has called himself a "lifelong surfer" with "a 'secret spot' in the Caribbean". His second favorite surfing spot is in Indonesia.[59] Third Point takes its name from "a break at Malibu's Surfrider Beach."[60]

In September 2014, Loeb paid $34 million USD to purchase the "Doheny Estate" in the Bel Air neighborhood of Los Angeles, California.[61]

In 2014 Loeb was reported as one of a number of "prominent investors [who] have taken to Transcendental Meditation".[62]

References[edit]

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  4. ^ a b c Vardi, Nathan. "World’s Richest Hedge Fund Managers & Traders". Forbes. Retrieved October 31, 2013. 
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  7. ^ Kampeas, Ron "Jewish, Republican, pro-gay rights", JTA, May 14, 2011.
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  36. ^ Avlon, John (February 28, 2013). "The Pro-Freedom Republicans Are Coming: 131 Sign Gay-Marriage Brief". The Daily Beast. Retrieved November 26, 2013. 
  37. ^ Weidner, David. "Why Wall Street went for gay marriage". Market Watch. Retrieved October 31, 2013. 
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  39. ^ Wachtel, Katya. "Lloyd Blankfein, Dan Loeb, And John Mack All Support Gay Couples Putting A Ring On It". Business Insider. Retrieved October 31, 2013. 
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  42. ^ Basar, Shanny (September 30, 2011). "Hedge fund managers vs Navy Seals". Financial News. Retrieved April 25, 2014. 
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  54. ^ Stevenson, Alexandra (August 26, 2013). "Third Point Hedge Fund Increases Sotheby’s Stake". Dealbook New York Times. Retrieved October 31, 2013. 
  55. ^ Vogel, Carol (May 13, 2009). "In ‘a Recalibrated Market’, Auction Buyers Take Over". New York Times. Retrieved October 31, 2013. 
  56. ^ La Roche, Julia. "Outside of his hedge fund, Loeb has an impressive art collection, which has actually proved to be a good investment.". Business Insider. Retrieved October 31, 2013. 
  57. ^ Wachtel, Katya. "Meet Wall Street's 25 Most Serious Art Collectors". Business Insider. Retrieved October 31, 2013. 
  58. ^ Ziegler, Maseena (December 1, 2012). "When Quitting Is Not An Option – How You Can Find Purpose And Fulfillment Through Your Career". Forbes. Retrieved December 27, 2012. 
  59. ^ La Roche, Julia. "Growing up near the beach, Loeb always been a life-long surfer.". Business Insider. Retrieved October 31, 2013. 
  60. ^ La Roche, Julia. "His hedge fund Third Point got its name from Loeb's love of surfing.". Business Insider. Retrieved October 31, 2013. 
  61. ^ http://www.latimes.com/business/realestate/hot-property/la-fi-hotprop-doheny-estate-20140917-story.html
  62. ^ Goodkind, Nicole. "Could this be the key to success on Wall Street? Hedge fund billionaire Ray Dalio thinks so". Retrieved 15 May 2014. The technique requires 20 minutes of silent meditation two times a day and is popular with folks like Bridgewater's Ray Dalio (who offers TM to his 400 employees), Bill Gross, Dan Loeb, Nigol Koulajian (Quest Partners) and Kevin Kimberlin (Spencer Trask & Co). 

External links[edit]