The founder of Third Point LLC, Dan Loeb is Wall Street's poison pen—a hedge fund manager whose letters to derelict corporate managers not only produce spectacular investment returns but also provide entertaining reading.
Loeb admits he's always had a big mouth: He says he even hired a bodyguard to protect him from the bullies he offended at his Los Angeles elementary school. The son of a lawyer and a historian, Loeb began playing the stock market in high school, and moved to New York to attend Columbia after transferring from UC Berkeley. By the time he'd reached his senior year, he'd amassed $120,000 in profits—and then promptly lost the whole lot with one bad investment. (Loeb says it taught him an early lesson in the dangers of over-concentration.) After working at Warburg Pincus for several years in the late '80s, Loeb grew bored and took a job at Island Records where he helped the label's founder, Chris Blackwell, secure financing. After a few years on the downtown scene—he lived on Avenue D in those days—Loeb turned back to finance with stints at a small New York financial firm and at Jeffries & Co. in LA. He returned to New York to join Citicorp as a junk bond salesman before launching Third Point in 1995 with $3.3 million from family and friends.
Loeb manages some $5 billion at his firm, but he's become one of the better known hedge fund managers thanks to the venom-filled missives he's penned over the years. As part of a Schedule 13D—the form the investors have to file with the SEC when they acquire a 5% ownership stake in any public company—Loeb has attached brutal letters that take aim at company management whom he doesn't think is up to snuff.
"It is time for you to step down from your role as CEO and director 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," Loeb wrote to Irik Sevin, CEO of Star Gas. Sevin took Loeb's advice and resigned shortly thereafter. But not before Loeb learned that Sevin had endowed a scholarship at Cornell in his name. "One can only pity the poor student who suffers the indignity of attaching your name to his academic record," he followed up in another letter. The CEO and board of directors of Nabi Pharmaceuticals received similar treatment: ""We will work assiduously… to ensure that you will have ample time to pursue your golf games and to enjoy the Florida sun thereafter." Loeb has also used his letters to take aim at his colleagues in the industry. "There is little I enjoy as much as watching you from afar as your reputation and 'organization' declines as the same rate as your falling returns," Loeb wrote to Ken Griffin of Citadel Investment Group.
The saber-rattling pays off for Third Point's investors—and for Loeb himself. The fund has an average annual return of 23% since inception, and Loeb himself earned an estimated $200-250 million in 2007.
On the side
An aggressive collector of contemporary art, Loeb owns works by the likes of Andy Warhol, Mike Kelley, and Cindy Sherman. (Richard Prince's "biker chick" photo, which depicts a topless woman on a motorcycle, used to hang in his Lever House office.) Art insiders have said he's yet to establish himself as a true "collector"; he's just as quick to take a profit on a painting as he is on a stock position. Perhaps not surprisingly, Loeb has taken his rabble rousing to the art market, too. A couple of years ago, after art advisor Jeanne Greenberg Rohatyn recommended he acquire a painting by Matthew Barney, he ended up squabbling with Barney's dealer, Barbara Gladstone, after she refused to sell the piece to him.
A lifelong surfer, Loeb named his fund Third Point after the legendary break at Malibu's Surfrider Beach. He's also a big yoga enthusiast: His morning routine reportedly begins with a yoga session and he's traveled to India to attend an Asthanga yoga school. By all appearances, he's a Quentin Tarantino fan, too: For years, Loeb was said to participate in online stock discussions under the handle "Mr. Pink." After he panned a company on a message board he'd also shorted, the company's founders filed suit.
A former man-about-town, Loeb finally settled down in 2004, marrying Margaret Munzer Loeb, a former yoga teacher and social worker. The couple recently decamped from a West Village townhouse to a 39th floor penthouse at the Robert A.M. Stern-designed 15 Central Park West. The five-bedroom, 10,700-square-foot pad—which cost Loeb $45 million and was created out of two separate condos—features 360-degree views, servant's quarters, an expansive deck, and a library. Loeb will now get to chat in the lobby with fellow financiers Sandy Weill (who owns the smaller penthouse in the other tower), Lloyd Blankfein, and Dan Och. Loeb, his wife and their miniature pinscher, Biggie, spend weekends at a Rafael Viñoly-designed house in the Hamptons. The couple also have a condo in Miami Beach.
The hedge funder owns a Gulfstream IV. The name of the company he set up to conceal the plane purchase from nosy people (like us)? Big Dog Aviation LLC.
Loeb's great-aunt, Ruth Handler, created the Barbie doll and co-founded Mattel.