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The Best Of Dan Loeb's Vitriolic Letters And Emails

Dan Loeb

He’s back!

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.

Loeb writes:

'...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.'

via 120467.com

(2/2) Then, Loeb ripped into the guy for being a lazy French/English aristocrat.

Loeb writes:

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.

Dan Loeb

via 120467.com

In 2006, he sent some emails about shorting Fairfax that were eventually made public where he told the CEO to 'bend over...'

Reuters' Matthew Goldstein reports:

'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.

Loeb writes:

'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.'

Source: Letter to InterCept

(2/6) Loeb accused the tech company of having a 'good ol' boy' culture.

Loeb writes:

'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.'

Source: Letter to InterCept

(3/6) He also called out the CEO's son-in-law golfing during business hours.

Loeb writes:

'I called Mr. Saylor last Friday at 4:00 p.m. at the Company's offices to learn more about the core product that he presumably sells. He had his calls forwarded to his cell phone since it was still business hours.'

'I identified myself as a shareholder interested in learning about the core product lines to which he replied that he could not speak as he was 'on the golf course.' I was not sure whether it was his relation with his father-in-law or the $US238,776 salary that affords him the opportunity to work on his golf game during business hours.'

Source: Letter to InterCept

(4/6) Loeb accused the CEO of 'tooling around' in a private jet.

Loeb writes:

'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.'

Source: Letter to InterCept

(5/6) Loeb said board member James Verbrugge was not qualified for his post.

He writes:

'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'.

He continues:

'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.'

Source: Letter to InterCept

(6/6) He also slammed the company's iBill business for contributing to the pornography industry.

He writes:

'What is incomprehensible is why Intercept would choose to go into the euphemistically named 'merchant processing business' when in fact a substantial majority of the revenues of this business were derived from processing charges for adult pornography sites on the Internet....'

Source: Letter to InterCept

(1/3) In September 2005, he sent a letter to Ligand Pharmaceuticals telling CEO David Robinson he's 'the worst.'

Loeb writes:

'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'.'

Source: Letter to Ligand

(2/3) He felt that Robinson should be shown the door 'accompanied by a well worn boot planted in the backside.'

He writes:

'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.'

Source: Letter to Ligand

(3/3) He also called out the company for poor financial controls and investor relations.

He writes:

'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.'

Source: Letter to Ligand

(1/6) In a February 2005 letter to Star Gas Partners, he called the CEO Irik Sevin 'dangerous' and 'incompetent.'

Loeb writes:

'Sadly, your ineptitude is not limited to your failure to communicate with bond and unit holders. A review of your record reveals years of destruction and strategic blunders which have led us to dub you one of the most dangerous and incompetent executives in America.'

Source: Letter to Star Gas

(2/6) He slammed Star Gas's CEO for having a scholarship in his name at Cornell.

Loeb writes:

'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.'

Source: Letter to Star Gas

(3/6) Loeb also wanted to know what kind of car Sevin was 'tooling around' in.

Limo driver

He writes:

'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.''

Source: Letter to Star Gas

(4/6) Loeb called out Sevin for having is elderly mother serving on the company's board.

He writes:

'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.'

Source: Letter to Star Gas

(5/6) He accused Sevin of using Star Gas as his 'personal honey pot.'

He writes:

'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.

He writes:

'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.'

Source: Letter to Star Gas

(1/2) In 2006, Loeb ripped the CEO of Pogo Producing, Paul Van Wagenen, on his 'poor reputation.'

Loeb writes:

'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.'

Source: Letter to Pogo

(2/2) Loeb then called for Van Wagenen to step down from his post because of his 'long and meager' track record.

He writes:

'In the one and a half decades you have run Pogo, shareholders have suffered subpar returns. Your track record is long and meager, and it is time for change. Accordingly, we demand that the Board immediately initiate a process to sell the Company in whole or several parts to the highest bidder or bidders. To underscore our commitment to this process, we are advising you today that we intend to conduct a proxy contest at your 2007 annual meeting of shareholders that will allow us to elect new directors comprising a majority of the Company's board of directors.'

Source: Letter to Pogo

Then how could we forget last year when Loeb called out then-Yahoo CEO Scott Thompson for lying about his college degree. Thompson ended up resigning.

Loeb writes:

Dear Board of Directors:

According to the Yahoo! Form 10-K/A, filed with the Securities and Exchange Commission on April 27, 2012, newly-hired Chief Executive Officer, Scott Thompson, 'holds a Bachelor's degree in accounting and computer science' from Stonehill College. This assertion was repeated in the Company's draft proxy statement, also filed with the SEC on April 27, 2012, as well as on the Company's website.

A rudimentary Google search reveals a Stonehill College alumni announcement stating that Mr. Thompson's degree is in accounting only. That announcement is consistent with other documents (including filings with the SEC) that reflect Mr. Thompson received a degree in accounting, but not computer science.

Now see what happened when we tried to compete with Loeb...

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