Hedge fund manager Daniel Seth Loeb founded Third Point LLC on June 1, 1995 with $US3.4 million in capital.
The then-33-year-old had money from only five investors — all friends and family — and his own capital.
Today, the billionaire activist investor oversees around $US17.5 billion in assets.
Since those early days, he has made a reputation for himself as a formidable money manager. As one fund manager recently put it, “he’s one of the best investors of our generation.”
So who is this activist investor? We’re going to a take a tour through Loeb’s life and find out.
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 favourite place in the world to surf is in Indonesia.
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 his classmate Rob Schwartz for 25 cents a day to be 'bodyguard' to protect him from bullies.
By the way, it looks like Schwartz works with Loeb today on his fund's venture capital arm, Third Point Ventures.
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.
Loeb studied economics. He also discovered a love for literature and art. Perhaps this is why he has a way with words.
'....For me, Columbia was transformative. I don't remember much about the specifics of the Economics courses that I majored in -- I apparently internalized the key concepts -- but I still remember vividly the thrill of reading Don Quixote, Epictetus, The Aeneid, King Lear and Candide, and how contemporary the stories and ideas in these old and ancient texts struck me. To this day, I still chuckle when I consider the bawdy tales of Rabelais, who seems now to have anticipated and channeled my own 6 year-old son's talent for potty talk. I fantasize that our politicians have been moved by the dialogues of Plato, and thus contemplate the ancient conflict of the sophists versus the lovers of truth. (I guess they determined that the former was the more expeditious course)'
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 $US20 million profit.
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, Rich Handler, who is now the CEO Jefferies, hired Loeb to work in their Los Angeles' offices as a sell-side research analyst. He later became a senior vice president in Jefferies distressed debt department.
After only one year, he left to start his own hedge fund in 1995. 'I thought 'Oh my God. What am I doing? I'm a fraud.'
After leaving Citi, Loeb said he had to make sure he had some capital to launch his hedge fund.
While he hoped to raise $US10 million for his fund, he was only able to secure a little over $US3 million from five 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.
'I learned the hard way that there was a lot I needed to learn a lot more about leadership skills, organisation, management, culture, process, and kind of tying it all together,' Loeb said at the SALT Conference in Vegas.
'For me, it didn't come naturally. It didn't come easily. I didn't go to a business school. I didn't really study it. In fact, I thought studying these things were corny things that people you sold or had manufactured it.'
Loeb thought that if you're a good trader and you put up the numbers that the business would take care of itself.
He attended a leadership class at Goldman Sachs called Pine Street. He met a coach there that he's worked with for seven or eight years now. They read books and talk about leadership and it's been integral to the fund's growth.
He's had some real challenges along the way. Third Point suffered tremendous losses during the financial crisis.
During his career as an activist investor, Loeb has earned a reputation for his strongly worded letters calling for board shakeups and CEO resignations.
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.
In 2005, Citadel founder Griffin's poaching of New York hedge fund employees caught the eye of Loeb. Griffin, who charges a higher management fee than most other funds, was allegedly luring the employees away with offers of higher salaries.
In the email, Loeb called Citadel a 'gulag' and forbade Griffin from approaching any Third Point employees under any circumstances. He also told Griffin matter of factly that Citadel was 'over-rated' and that Griffin does not know how to manage people.
I understand your need to hire employees from other firms, something that Third Point has not had to do based on the fact that, unlike yourself, I actually enjoy and have talent in investing and am able to nurture others within my organisation whom I hire from wide ranging disciplines such as graduate schools, private equity firms and medicine.
We've heard that they made up.
Source: Insider Monkey
Then there was the rumour Loeb used to post vitriolic things about companies on web message boards as 'Mr. Pink.'
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 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, who is also politically active, used to support his former classmate President Obama, but that changed.
Loeb was a classmate of President Barack Obama while at Columbia University.
At first he was a supporter of Obama, but that all changed.
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%'
Loeb is one of a handful of fund managers that's become heavily involved in education reform efforts, particularly by working with charter schools. Loeb is the chairman of the board for Success Academy in New York.
Back in 2013, Loeb and other money managers were placed on a so-called 'watch list' by the American Federation of Teachers that was sent out to pensions. Some of the folks on the list viewed it as a 'badge of honour.' Loeb used the criticism from the unions as a chance to increase his support for Success.
Loeb's father passed away from Alzheimer's in 2012. To honour his memory, Loeb donated $US15 million to Mount Sinai Hospital in December 2014 to set up the Ronald M. Loeb Center for Alzheimer's Disease.
'When my father was sick, I learned how painful this disease is for those afflicted and their families. I also recognised that there is little hope for patients today beyond slowing the progression of Alzheimer's. We urgently need more resources to find a cure or effective prevention,' he said.
The Loeb's 8-bedroom,10,700 square-foot penthouse condo in the Upper West Side, which he bought for a record-breaking $US45 million in 2005 before the building was even constructed.
They also own a stunning Hamptons home.