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The Fabulous Life Of Dan Loeb — The Hedge Fund Manager At War Against Bill Ackman
Daniel S. Loeb, the founder of Third Point LLC, has a reputation for his strongly worded (and public) letters to companies and CEOs.
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The sharp-tongued fund manager has made headlines again after taking a massive long position in Herbalife, the stock rival Bill Ackman has been publicly shorting.
Third Point has disclosed that it owns 8,900,000 shares or an 8.24% stake.
Ackman believes Herbalife, a multi-level marketing company that sells nutrition products, is a pyramid scheme. Loeb doesn't believe Ackman's accusation has merit.
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Right now, it's an all-out hedge fund war between this hedge fund titans.
So who is this activist investor? We're going to a take a tour through Loeb's life and find out.
The hedge fund manager was born on Dec. 18, 1961. (He definitely looks younger than 51)
Loeb, the son of Ronald and Clare Spark Loeb -- a lawyer and a historian, respectively -- grew up in sunny Santa Monica, Calif.
Even in his early fifties, Loeb still catches waves.
During his talk at the Jewish Enrichment Center in 2009, Loeb said that he has a "secret spot" in the Caribbean and he second favorite place in the world to surf is in Indonesia.
In 2009, during a speech at the Jewish Enrichment Center, Loeb told the audience that he became fascinated in investing around the age of 5 or 6.
He said that's because entrepreneurship runs in his family.
His great aunt, Ruth Handler was one of the founders of Mattel toys, the creator of the Barbie doll.
"I associated success in business with Hot Wheels and Barbie dolls. I think it was a very powerful enforcer early on to like business," he told the audience at the Jewish Enrichment Center in 2009.
Source: Jewish Enrichment Center
He attended Palisades Charter High School where he took AP classes and started his own skateboard company.
Because he loved trading stocks, one of his teachers nicknamed him "Milo Minderbinder"-- a character from Joseph Heller's novel "Catch-22" who was a World War II profiteer controlling the black market.
Source: Jewish Enrichment Center
Loeb, who studied economics, had made $120K in profits from investing by the time he was a senior at Columbia.
However, he lost all of it on one really bad investment in Puritan-Bennett Inc, a medical respirator maker which suffered massive losses after its ventilators were associated with several deaths.
That bad investment taught Loeb a lesson about the problem of "overconcentrating positions."
From early on, Loeb seemed to have a knack for picking out good investments.
During his stint in private equity, Loeb looked over the books for CNW Corp and said the company was undervalued.
Warburg Pincus ended up buying a stake in the Chicago-based company was able to make a $20 million profit.
Loeb did a stint at Chris Blackwell's Island Records where he worked as director of corporate development.
His job there was to secure debt financing.
Fab 5 Freddy, a hip hop and graffiti artist in the 1980s, became friends with Loeb when the now-famed hedge funder was just getting his start in New York.
Following his career in the music industry, Loeb did a brief stint at New York-based hedge fund Lafer Equity Investors LP.
Then in 1991, he joined Jefferies Los Angeles' offices as a sell-side research analyst where he later became a senior vice president in Jefferies distressed debt department.
After leaving Citi, Loeb said he had to make sure he had some capital to launch his hedge fund.
While he hoped to raise $10 million for his fund, he was only able to secure a little over $3 million from friends and family members and money out of his own pocket.
The night before he started investing, he said he "absolutely panicked."
"I thought 'Oh my God. What am I doing? I'm a fraud.' there no way I could do it. What was I thinking? This is crazy. Luckily, I was up 8% the first month and didn't have that fraud feeling again..." he said to the audience at the Jewish Enrichment Center in 2009.
Again, going back his surfing roots, Third Point is named after a break at Malibu's Surfrider Beach.
Clearly, he was obsessed with it.
"Any girls here? You know when you're in Junior High School you were in love with a guy and you would write his name over and over on a piece of paper?" Loeb said during his 2009 talk at the Jewish Enrichment Center. "I used to write 'Third Point Partners' over and over. 'Third Point Partners' 'Third Point Partners' 'Third Point Partners.'"
"I used to fantasize how I would start my fund...I'd do logos, like this was really like a dream of mine to get this thing going," he said.
Source: Jewish Enrichment Center
"I've enjoyed collecting art," Loeb said during his talk at the Jewish Enrichment Center.
"I've enjoyed art ever since, I'll tell you when, I went to Columbia. I went to the Met and I saw Poussin's 'Rape of the Sabine Women' and it's this incredible, epic, great, great painting. And anyway, I was at Columbia and luckily they had this core curriculum -- I had this art humanities class. There was the painting I felt like, I put up my hand, the painting 'It's Poussin.' All the prep school kids were like 'What a jerk.' They all knew so much more. The teacher, I got one of two A's, and all the prep school snotty kids didn't."
He said that's always followed art and after going to a collector's show at the MoMa he just really got into it.
"I really just started buying art as a passion. I never considered it an investment, but it ended up being a good investment."
Loeb's art collection is said to include mostly postwar and contemporary art, including Richard Prince, Basquiat, Andy Warhol, Mike Kelley, and Cindy Sherman.
Loeb was a classmate of President Barack Obama while at Columbia University.
At first he was a supporter of Obama, but that all changed.
Here's an excerpt from an email he sent in Dec. 2010:
Dear Friends/battered wives:
It is that time of year and I just thought of the perfect gift in light of some of you. In case the President’s hostage rant wasn’t enough to turn you off, I thought I’d buy any of you a great book for gals who just keep on pursuing the wrong guy. Made popular on Oprah a few years back, “He’s Just Not That Into You” seems like the perfect holiday stocking stuffer for true blue Democrats who just can’t get enough of our President’s smack downs on hard working successful Americans known as “the 2%”
....
Aside from surfing, Loeb, a self-described "health nut," practices Ashtanga yoga and competes in triathlons.
Last fall, he challenged three Navy Seals to participate in a triathlon with him.
Loeb is married to the beautiful Margaret Munzer Loeb, a former yoga instructor who graduated from Brown University and from NYU's School for Social Work.
Together they have three children.
The Loeb's are big supporters of Prep for Prep and the Lincoln Center.
The Loeb's 8-bedroom,10,700 square-foot penthouse condo in the Upper West Side, which he bought for a record-breaking $45 million in 2005 before the building was even constructed.
The scathing letters, written to spur shakeups and CEO replacements, cut right to the chase. Loeb often calls the leaders the worst he's ever seen and accuses them of "tooling around."
But the best part is that he often signs them "Very truly yours, Daniel S. Loeb."
"These things read like spy novels, there's intrigue, hyperbole, there's revelations about things..." Loeb said during his talk at the Jewish Enrichment Center.
Third Point, which owns a 6.17% stake in Yahoo!, is responsible helping shake up the company's leadership.
Last spring, Loeb revealed Yahoo's CEO Scott Thompson had a huge inaccuracy in his biography regarding his college degree.
He played a role in bringing in Marissa Mayer as the new CEO.
On December 17, 2012, he made $500 million profit off of a Greek Government Bond bet, the Financial Times' Sam Jones reported citing sources familiar.
That was the day before his 51st birthday. Talk about a happy birthday!
Loeb has amassed 8,900,000 shares of Herbalife, or an 8.24% stake.
While Ackman believes the company is a pyramid scheme, Loeb doesn't think that accusation has any merit.
In fact, Loeb believes the stock is going to soar.
This is going to be an interesting hedge fund war.
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