In William D. Cohan’s December 2013 profile of billionaire hedge-fund manager Dan Loeb, one colleague described Loeb’s public filings as “the most obnoxious letters on the planet . . . juvenile, sophomoric, and cringe-making.” But don’t let the words of an anonymous colleague sway you; see for yourself. Below, Loeb’s top 10 most cutting items of correspondence. Editor’s note: all punctuation errors are Loeb’s, not ours.
1. Penn Virginia Corporation
February 27, 2002
The ill conceived and poorly timed $112.0 million acquisition of Synergy Oil & Gas (“Synergy”) appears to bode poorly for this management team’s ability to complete accretive corporate transactions . . . . With all due respect, the sophisticated Texas oilmen (Synergy C.E.O., Eric Pitcher and the individuals at Natural Gas Partners) that sold their interest in Synergy saw the Appalachian coal men coming with aspirations to wear crocodile skin cowboy boots, silver spurs and ten-gallon hats. No doubt the folks at NGP who sold Synergy so near the top tick of the natural gas bubble had quite a hootenanny at Penn Virginia shareholders’ expense.
2. Star Gas Partners
February 14, 2005
We have also tried to reach you on innumerable occasions only to be told that your legal counsel advised you against speaking to bondholders and shareholders due to the torrent of shareholder litigation currently being brought against senior management and the Company . . . . Sadly, your ineptitude is not limited to your failure to communicate with bond and unit holders. A review of your record reveals years of value destruction and strategic blunders which have led us to dub you one of the most dangerous and incompetent executives in America. (I was amused to learn, in the course of our investigation, that at Cornell University there is an “[Star Gas C.E.O.] Irik Sevin Scholarship.” One can only pity the poor student who suffers the indignity of attaching your name to his academic record.)
3. Yahoo!
May 3, 2012
A rudimentary Google search reveals a Stonehill College alumni announcement stating that [Yahoo C.E.O. Scott] Thompson’s degree is in accounting only . . . . Upon recognizing this discrepancy, Third Point initially assumed that the documents we had reviewed were incorrect and the representations in Yahoo!’s public filings were accurate. However, we were then informed by Stonehill College that Mr. Thompson did indeed graduate with a degree in accounting only. Furthermore, Stonehill College informed us that it did not begin awarding computer science degrees until 1983—four years after Mr. Thompson graduated. We inquired whether Mr. Thompson had taken a large number of computer science courses, perhaps allowing him to justify to himself that he had “earned” such a degree. Instead, we learned that during Mr. Thompson’s tenure at Stonehill only one such course was even offered—Intro to Computer Science. Presumably, Mr. Thompson took that course.
4. Quarterly letter to investors
July 29, 2013
We were surprised that after [Sony] Entertainment’s highly-touted big budget summer film releases—After Earth and White House Down—bombed spectacularly at the box office, C.E.O. Hirai, speaking at the Allen & Co. Sun Valley conference a few weeks ago, brushed off these failures, saying: “I don’t worry about the Entertainment business, it’s doing just fine” We find it perplexing that Mr. Hirai does not worry about a division that has just released 2013’s versions of Waterworldand Ishtar back-to-back.
5. Intercept, Inc.
May 27, 2004
The Company’s proxy statement 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 C.E.O.’s daughter, Denise, and her husband David Saylor, who received total compensation of $238,776 in 2003. 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 $238,776 salary that affords him the opportunity to work on his golf game during business hours.
6. Ligand Pharmaceuticals
September 23, 2005
When one analyst was queried about the reputation of the senior executives at the Company, he said that you [Ligand C.E.O. David Robinson] 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”. I must wonder how in this day and age the Company’s Board of Directors has not held you and [Ligand C.F.O.] 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.
7. Nabi Biopharmaceuticals
April 27, 2006
If you have not read our filing, and the demands that we make therein, I strongly urge you to do so immediately. I’d also encourage each of you to review a history of Third Point’s prior “activist investments” to get an idea of how we have approached similar situations in the past (i.e., when we determine that a company has substantial asset value that is not reflected in the stock price due to poor corporate management and board oversight). Any one of these examples may serve as an object lesson for what the Board and Nabi management may expect should we not hear promptly.
8. Sotheby’s
October 2, 2013
Sotheby’s is like an old master painting in desperate need of restoration. Auctions, private and internet sales all need to be reinvigorated or revamped . . . . As with any important restoration, Sotheby’s must first bring in the right technicians. Third Point is not only Sotheby’s largest shareholder but also has significant experience and a successful track record of serving on public company boards. I am willing to join the board immediately.
9. Salton
February 14, 2005
The conference call debacle pales in comparison to what I witnessed last summer when I attended the U.S. Open tennis final. You can only imagine my consternation when I looked around the stadium and saw the Salton name emblazoned all around the interior of the stadium walls next to such robust companies as IBM, JP Morgan and Mass Mutual. I had to wonder how much precious capital had been squandered in such a poorly conceived marketing scheme to promote the Salton name when the Company was in such dire financial straits. My bewilderment quickly turned to anger when I saw the crowd seeking autographs from the Olsen twins just below the private box that seemed to be occupied by Mr. Dreimann and others who were enjoying the match and summer sun while hobnobbing, snacking on shrimp cocktails and sipping chilled Gewurztraminer.
10. Potlach
April 7, 2003
Since you ascended to your current role of Chief Value Destroyer (“C.V.D.”) when you assumed the formal title of C.E.O. in 1999, the shares have dropped over 45%, a destruction of shareholder value in excess of $520 million. This negative sum does not include the decline in the Company's pension plan over the past two years which has gone from a surplus of $156 million at December 31, 2000 to a surplus of $88 million at December 31, 2001 to its current under-funded status of $54 million . . . . Your sorry excuse that “everyone else does it” is reminiscent of a teenager who uses peer pressure as a pretext to explain his drug problem. I only wish that I could recommend a recovery program for you and [Potlach C.F.O.] Gerald Zuelhke for your apparent addiction that could be called “Value Destroyers Anonymous.”
