Hedge fund titans Bill Ackman, Daniel Loeb and Carl Icahn are all playing nice these days.
The three legendary activist investors spoke on a panel hosted by Institutional Shareholder Services (ISS) at the New York Athletic Club in Midtown Manhattan on Thursday evening.
It was also the first time all three of them were ever on a panel together.
A source tells us that the three fund managers all “played well in the sandbox.” The source added, “They were very polite and complimentary with one another.”
Last night’s panel was also significant because the activists had a history of fighting. It wasn’t so much the trio fighting amongst each other, but Loeb and Icahn taking aim at Ackman.
More than two years ago, they were all engaged a public and nasty hedge fund war with multi-level marketing company Herbalife at the epicentre.
Since December 2012, Ackman has been publicly crusading against Herbalife, which sells weight loss shakes and vitamins. He believes that the company operates as a “pyramid scheme” and is betting more than $US1 billion that the stock goes to $US0.
After Ackman made his short public, numerous hedge fund managers, most notably Icahn and Loeb, piled on by going long the stock.
A month after going public with the short, Ackman was on CNBC responding to Icahn’s criticism. Minutes into the show, Icahn called in and hurled insults on live TV.
“I’m telling you he’s like a crybaby in the schoolyard. I went to a tough school in Queens you know and they used to beat up the little Jewish boys. He was like one of the little Jewish boys crying that the world is taking advantage of him…” Icahn said at the time.
Ackman and Icahn’s feud was legendary and it lasted more than a decade. It all started with a “forgettable deal” over a real estate company. Their feud was so notorious that even waiters reportedly knew to never seat them next to each other at Marea, a high-end Italian seafood restaurant on Central Park South. They have since made up, though. Last spring, Ackman called Icahn’s assistant to forgive him. They later hugged each other on stage at the CNBC “Delivering Alpha” Conference in July. They both said that they “respect” each other.
Ackman and Loeb also had a history.
In January 2013, the Third Point CEO disclosed a big stake in Herbalife. Loeb, who is famous for his poisonous pen and sharply-worded letters, wrote in a letter to his investors that Ackman’s thesis lacked “merit” and his pyramid scheme claim was “preposterous”. At the time, Loeb also gave stock a price target of $US55 to $US68 a share.
Shortly after, though, Loeb exited the position shortly after for a $US50 million profit. He sold his stake during a time when the stock was trading below his price target. (The highest the stock hit during that time frame was $US46.19 a share.)
According to a Vanity Fair profile, Ackman confronted Loeb about that trade at the magazine’s Oscar party that February. Ackman reportedly told Loeb that what he did was “really wrong.” Vanity Fair also said that they weren’t speaking.
Then, in August 2013, when Herbalife’s shares were trading above $US61 and Ackman was feeling the heat, Loeb left a taunting message on his Bloomberg terminal clearly for his rival: “New HLF product: The Herbalife Enema, administered by Uncle Carl.” Shortly after, Ackman told Andrew Ross Sorkin in a Q&A that Loeb had never been a “close friend.”
That’s all in the past now. They reconciled last spring over a group dinner following a bank’s conference for executives.
It seems the three fund managers are better united. We’re told that their first-ever panel discussion together was great and that the venue was packed with folks who wanted to see all three of them together.
During the panel, the three fund managers discussed how the activist strategy has changed over the years. For example, in the 1980s, the “greenmail” strategy — a practice where companies would fend off aggressors by buying back their shares at above the market price — would only benefit the activists at the expense of the other investors. The idea is that nowadays all of the shareholders make money if the activist investor is successful.
All agreed that they would prefer to not have a proxy contest if they could. They also agreed that a lot of boards in the US are still comprised of retired un-engaged members who don’t challenge management enough.
There was no discussion of Herbalife.
There was also no mention of the past either. Perhaps it’s better that way.
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