DEPT. OF NOISEMAKING THE ANGRY INVESTOR Issue of 2005-04-18 Posted 2005-04-11 Last week marked the end of an era at Madison Square Garden, when Spike Lee, the Knicks’ iconic superfan, hugged his nemesis Reggie Miller, who is retiring from the Indiana Pacers, at center court. After more than a decade of combat, no more heckling, no more yapping. The truce doesn’t exactly leave a void in the local-loudmouths department, but recent events, at the Garden and elsewhere, have occasioned a realignment of the yappers’ pecking order, and no one seems quite as energized these days as Daniel Loeb, the forty-something multimillionaire who has positioned himself as a kind of investor’s H. L. Mencken, dedicated to puncturing the social habits and pretensions of powerful executives from his courtside perch at Third Point L.L.C., a hedge fund on Madison Avenue. Loeb’s favored device is the scolding letter, formally addressed, publicly released, and ruthlessly frank in its assessments of managerial competence. He writes the boards and C.E.O.s of companies that his fund has invested in, complaining, in effect, that they are not making him and his clients enough money. And, like a certain kind of basketball fan unhappy with an overpaid, underperforming point guard, he recommends, in hyperbolic language (“to ensure you a dazzling place in the firmament of bad management”), that they be replaced—benched. To some degree, his manner is that of the traditional Wall Street crank: swagger and self-interest disguised as moralistic bombast. What Loeb brings, in terms of value-added, is tacked-on social commentary: the sly references to Brooks Brothers (“out-dated men’s fashions catering to the country club set”) or to “the Appalachian coal men coming with aspirations to wear crocodile skin cowboy boots, silver spurs and ten-gallon hats.” His style—call it hedge-fund populism—has earned him a wide readership that extends far beyond the shareholders and directors who have an interest in the matter at hand. Each new abusive dispatch makes the rounds among financial professionals, as Loeb’s more astute fans and detractors take note of his recurring motifs: chauffeurs, hobnobbing, the phrase “inexplicable insouciance.” One day in February, for example, Loeb fired off scalding letters to two C.E.O.s, accusing each, ostensibly, of producing insufficient profits and paltry returns. What really had him bothered, in the case of Salton, Inc., wasn’t so much the dwindling stock price as the suggestion of entitlement and sloth. It especially galled him to see the Salton chief, Leonhard Dreimann, at the U.S. Open tennis final. “My bewilderment quickly turned to anger,” Loeb wrote, “when I saw the crowd seeking autographs from the Olsen twins just below the private box that seemed to be occupied by Mr. Dreimann and others who were enjoying the match and summer sun while hobnobbing, snacking on shrimp cocktails, and sipping chilled Gewürztraminer.” Then there was the letter to Irik Sevin, the chief of Star Gas Partners (and “one of the most dangerous and incompetent executives in America”): “Do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites.” (Loeb himself has a fifteen-million-dollar waterfront house in East Hampton.) Hobnobbing was not Sevin’s only crime: Loeb had learned of an Irik Sevin scholarship at Cornell. “One can only pity the poor student who suffers the indignity of attaching your name to his academic record,” he wrote. He got even more personal. “How is it possible that you selected your elderly 78-year old mom to serve on the Company’s Board of Directors and as a full-time employee?” Loeb wondered. “Under what theory of corporate governance does one’s mom sit on a Company board?” A heckler’s cardinal rule: When in doubt, drop the mom bomb. Sometimes, yapping can even seem to be very effective. A few weeks ago, Irik Sevin quietly resigned. So did his mother, Audrey. (Dreimann remains at Salton. Neither man cared to respond to Loeb’s attacks.) And so it was on the wave of that recent success that Loeb was moved, the other day, to expand his critical reach across the Atlantic. In an e-mail exchange with a London-based money manager named Alan Lewis, who was exploring the idea of working for Third Point, Loeb grew impatient with the polite pace of their discussions. “We find most Brits are a bit set in their ways and prefer to knock back a pint at the pub and go shooting on weekends rather than work hard,” he wrote Lewis. “Daniel, I guess your reputation is proven correct,” Lewis replied, noting that, as a matter of fact, he is half American and half French. “Things are done differently here, yes place in society still matters, where one went to school, etc.” “Your ‘inexplicable insouciance’ and disrespect is fascinating; it must be a French/English aristocratic thing,” Loeb shot back, adding a classic hedge-fund diss: “There must be an insurance company or mutual fund out there for you.” The discussion wound down with a volley of one-word grenades: “hubris” from Lewis, “laziness” from Loeb. Finally, satisfied that the correspondence merited inclusion in the canon, Loeb did what he does best: he went public. “It is hard to find good help these days,” he wrote to an undisclosed list of colleagues and friends, attaching the entire exchange. “Read from the bottom.” |  
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Thursday, September 22, 2005
My new favorite hedge fund manager - Dan Loeb - Third Point
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Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.
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