Dan Loeb, the founder of Third Point LLC, has a reputation for his strongly worded (and public) letters to companies and CEOs.
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.”
And just last week, the activist shareholder, whose fund owns a 5.81% stake in the company, revealed Yahoo’s CEO Scott Thompson had a huge inaccuracy in his biography regarding his college degree.
Now he’s demanding that Yahoo! turn over all documents regarding Thompson’s hiring. He also wants Thompson out as chief executive.
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 50)
Loeb, the son of Ronald and Clare Spark Loeb -- a lawyer and a historian, respectively -- grew up in sunny Santa Monica, Calif.
Loeb, who's still known for his big mouth, had to hire a bodyguard to protect him when he offended other kids in school.
Loeb used to get himself into trouble in the schoolyard with his big mouth.
So when he was 12 years-old at Paul Revere Junior High School in L.A., he hired a classmate for 25 cents a day to be 'bodyguard' to protect him from bullies.
Even in his early fifties, Loeb still catches waves.
During his talk at the Jewish Enrichment centre in 2009, Loeb said that he has a 'secret spot' in the Caribbean and he second favourite place in the world to surf is in Indonesia.
In 2009, during a speech at the Jewish Enrichment centre, 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 centre in 2009.
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.
After two years at UC Berkeley, he transferred to Columbia University in New York where he made a terrible investment his senior year.
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.'
After graduation, Loeb joined private equity firm Warburg Pincus and helped them make millions on an investment.
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.
He didn't always work in finance, though. Loeb left the private equity world in 1987 to work for a record label.
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 centre 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 centre. '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.
Outside of his hedge fund, Loeb has an impressive art collection, which has actually proved to be a good investment.
'I've enjoyed collecting art,' Loeb said during his talk at the Jewish Enrichment centre.
'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, who is also politically active, used to support his former classmate President Obama, but that changed.
During his career as an activist investor, Loeb has earned a reputation for his strongly worded letters calling for board shakeups and CEO resignations.
These public letters from Loeb began back in 2000 when he used a 13D to urge a CEO to turn down a bid for a proposed merger because it was too low.
In 2000, he used a Schedule 13D -- a form the SEC requires shareholders who buy or sell more than 5% in a publicly traded company to file with the regulatory agency -- to urge the CEO of Agribrands to turn down the proposed bid for a merger with Ralcorp because the tender offer was too low.
Then, Cargill topped Ralcorp's bid and Loeb made $20 million off of it.
After that, letters from the 'poisonous pen' kept coming. In 2003, Loeb urged Washington-based Potlatch's CEO Pendleton Siegel to step down.
Sometimes in these letters he would to rip into the CEOs for using private jets. In 2004 he accused the CEO of InterCept of 'tooling around' in his private jet and demanded he resign.
In 2004, Loeb's Third Point had acquired 1.45 million shares of InterCept, or a 7.1% stake in the company. He then sent a letter to InterCept's chairman and CEO John Collins demanding that he resign, along with board members and sell the company
'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.'
In 2005, Loeb, whose Third Point held a 6% stake in Star Gas, sent a letter to Irik P. Sevin, the company's president and CEO.
He called for Sevin, who he has known for a long time, to step down and go to his Hamptons mansion.
'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.'
Third Point, which owns a 5.81% stake in Yahoo!, is currently trying to shake up the company's leadership.
Last week, Loeb revealed Yahoo's CEO Scott Thompson had a huge inaccuracy in his biography regarding his college degree. He's also demanding that Yahoo! turn over all documents regarding Thompson's hiring and he's made it very clear that he wants Thompson out as chief executive.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.