Hedge fund manager Daniel Loeb, who has a reputation for his vitriolic letters and emails, has sent a scathing letter to Sotheby’s, the activist investor’s latest target.
This time around Third Point CEO is a bit more toned down than he has been in the past, but he still, calls for the CEO to step down.
Rough, but his old letters were worse.
Back in the day Loeb would slam company CEOs for being the worst he’s ever seen and accuse them of “tooling around.”
Of course, he politely signs them “Very truly yours, Daniel S. Loeb” or “Sincerely, Daniel S. Loeb.”
We’ve compiled some of his best gems he’s sent to company execs in the past. [via danloebletters.blogspot] We have also included some of his more colourful emails that were made public.
(1/2) In 2005, London-based fund manager Alan Lewis was inquiring about a job at Third Point, but didn't want to give Loeb investment ideas over email, so Loeb trashed him in an email.
'...We find most Brits are bit set in their ways and prefer to knock back a pint at the pub and go shooting on weekend rather than work hard. Lifestyle choices and important and knowing one's limitations with respect to dealing in a competitive environment is too. That is Lesson 1 at my shop.
'It is good that we learned about this incompatibility early in the process and I wish you all the best in your career in traditional fund management.'
Well, you will have plenty of time to discuss your 'place in society' with the other fellows at the club.
I love the idea of a French/English unemployed guy whose fund just blew up telling me that I am going to fail.
At Third Point, like the financial markets in general,'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.
Your 'inexplicable insouciance' and disrespect is fascinating; It must be a French/English aristocratic thing. I will be following your 'career' with great interest.
I have copied Patrick so that he can introduce you to people who might be a better fit-there must be an insurance company or mutual fund out there for you.
In 2006, he sent some emails about shorting Fairfax that were eventually made public where he told the CEO to 'bend over...'
'Prem Watsa bend over the hedge funds
have something special for you,' Loeb wrote in the June 25, 2006 email to Adam Sender, the founder of Exis Capital, whose hedge fund also was 'shorting' Fairfax -- that is, looking to profit from a decline in its shares. A little later that day, in an email to a consultant who was doing research for some of the hedge funds wagering on Fairfax's fall, Loeb wrote: 'die, Prem Die!'
(1/6) In 2004, Loeb sent a letter to InterCept's chairman and CEO John Collins calling them the 'worst' management team.
'Do not confuse our $US22 million stake as a vote of confidence in the Company's senior management or its Board of Directors. On the contrary, it is our view that your record in management, acquisitions and corporate governance is among the worst that we have witnessed in our investment career. It is further apparent that the current Board of Directors represents the narrow interests of the management instead of the shareholder base as the law requires of fiduciaries.'
'The Company's proxy statements provides us with our first indication that a 'good ol' boy' ('GOB') set of ethics prevails at the Company rather than standards dictated by fairness and good judgment. First, the Company employs the CEO's daughter, Denise, and her husband David Saylor, who received total compensation of $US238,776 in 2003.'
'We also learned that the Company leases a private jet from a partnership controlled by CEO John Collins and fellow board member Glen W. Sturm (1), a partner at Nelson Mullins Riley & Scarborough LLP ('Nelson Mullins'), a firm that also received millions of dollars of legal fees from the Company over the past several years. This cozy relationship gave us pause and caused us to wonder how Mr. Sturm and the Nelson firm could represent the interests of shareholders given he gravy train of legal fees earned by the firm and the fact that Sturm and Collins could potentially be tooling around in a luxurious business jet, possibly sipping Cristal Champagne cocktails at shareholder expense.'
'Dr.' James Verbrugge, evidently a doctor of business at the Terry College of Business. I turned to the school's website for biographical background. For reasons that will be made apparent shortly, Dr. Verbrugge seems to be a living example of the old adage that 'those who can't do teach'.
'I must admit that I was so distraught by our conversation that my temper got the best of me and loudly informed Dr. Verbrugge that I was flunking him as a director of the Company and that I planned to expel him from the board as soon as practicable, before unilaterally terminating the conversation.'
(1/3) In September 2005, he sent a letter to Ligand Pharmaceuticals telling CEO David Robinson he's 'the worst.'
'When one analyst queried about the reputation of the senior executives at the Company, he said that you are 'the worst CEO in biotech', and another analyst we spoke with attributed the significant valuation disparity between the current stock price and the much higher intrinsic value of the Company to the 'David Robinson Discount'.'
(2/3) He felt that Robinson should be shown the door 'accompanied by a well worn boot planted in the backside.'
'I must wonder how in this day and age the Company's Board of Directors has not held you and Paul Maier responsible for your respective failures and shown you both the door long ago - accompanied by a well worn boot planted in the backside.'
'Notwithstanding the sorry state of the Company, the apparent lack of financial controls, the consistently disappointing results and the abysmal investor relations, we estimate that the value of Ligand's assets far outstrip the current enterprise value of the Company, currently valued by the market at approximately $US700 million on a fully-diluted basis.'
'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.'
'Furthermore, given the magnitude of your salary, perhaps you can explain why the Company paid $US41,153 for your professional fees in 2004 and why the Company is paying $US9,328 for personal use of company owned vehicles. We questioned Mr. Trauber about the nature of this expense, and I was frankly curious about what kind of luxury vehicle you were tooling around in (or is it chauffeured?). He told us that you drive a 12 year old vehicle. If that is so, then how is it possible that the company is spending so much money on the personal use of a vehicle that is 12 years old? Additionally, your personal use of a Company car appears to violate the Company's Code of Conduct and ethics which states that 'All Company assets (e.g. phones, computers, etc) should be used for legitimate business purposes.''
'The Company's Code of Conduct and Ethics also clearly states under the section on Conflicts of Interest, that A 'conflict occurs when an individual's private interest interferes or even appears to interfere in any way with the person's professional relationships and/or the interests of SGP...Likewise, you are conflicted if you or a member of your family receives personal benefits as a result of your position in SGP...'
'By this clearly stated policy, how is it possible that you selected your elderly 78-year old mum to serve on the Company's Board of Directors and as a full-time employee providing employee and unitholder services? We further wonder under what theory of corporate governance does one's mum sit on a Company board. Should you be found derelict in the performance of your executive duties, as we believe is the case, we do not believe your mum is the right person to fire you from your job.... We insist that your mum resign immediately from the Company's board of directors.'
'Irik, at this point, the junior subordinated units that you hold are completely out of the money and hold little potential for receiving any future value. It seems that Star Gas can only serve as your personal 'honey pot' from which to extract salary for yourself and family members, fees for your cronies and to insulate you from the numerous lawsuits that you personally face due to your prior alleged fabrications, misstatements and broken promises'
(6/6) He called for Sevin, who he has known for a long time, to step down and go to his Hamptons mansion to 'hobnob' with fellow socialites.
'I have known you personally for many years and thus what I am about to say may seem harsh, but is said with some authority. 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.'
'We approached the meeting with an open mind and the sincere hope that you would answer our questions in a way that might help dispel your poor reputation among your peers, energy analysts and investors. While the meeting reinforced our positive view of the Company's underlying asset value, it also contributed to investor concerns that Pogo's management has failed to pursue cohesive exploration, development, acquisition and financial plans.'