Tag Archive | moneymakingcurve

a noted poison pen, part iii

Public brawling – however entertaining – merely confirms the collective wisdom of the great unwashed that hedge funds are a bunch of irresponsible cowboys.

Greg Newton of Naked Shorts (via nytimes)

(via insidermonkey): “In 2005, Daniel Loeb was upset about Ken Griffin’s poaching key employees from New York hedge funds. To be fair, Ken Griffin managed to convince fund investors to foot all of the expenses and he charged 8.75 percentage points in management fees in 2005. On top of that, Citadel collects a 20 percent incentive fee. As a result, Griffin was able to pay key talented employees more than New York hedge funds were. Daniel Loeb didn’t take this lightly and sent the following letter to Ken Griffin:

Dear Ken,

I understand that you recently hired an employee of Greenlight and have also attempted to hire Third Point employees in the past. I think Andrew made a horrible decision based upon discussions that I have had with numerous former and current Citadel employees/ indentured servants.

I find the disconnect between your self-proclaimed “good to great, Jim Collins-esque” organization and the reality of the gulag you created quite laughable. You are surrounded by sycophants, but even you must know that the people who work for despise and resent you. I assume you know this because I have read the employment agreements that you make people sign.

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 organization whom I hire from wide ranging disciplines such as graduate schools, private equity firms and medicine.

Let me be clear that, under no circumstances, are you to approach any Third Point employees or attempt to offer them jobs. First of all, like Brad Radoff, who you poached from me some years ago, you do not even know how to manage people who invest. He has happily returned to the Third Point fold and is doing extremely well.

Secondly, those that you have approached know the low regard in which I hold you and your over-rated firm, and they are happy to meet with you and report back to me the sorry state of affairs over there and your desperate attempts to replicate our success.

My warning extends to any attempt you may make to hire employees of my friends in the event-driven space: should you attempt to hire people from them, I will consider it a similar act of war. My friends enemies become my enemies.

Good luck extracting exorbitant management fees and generating mediocre returns with your bloated organization and ego. By the way, there is little I enjoy as much as watching from afar as your reputation and “organization” declines at the same rate as your falling returns.

source: wilmott forums


a noted poison pen, part ii

(via ft): “Alan Lewis is managing director of Sthenos Capital, a London hedge fund manager that closed its funds at the end of 2004. Daniel Loeb is chief executive of Third Point, a US hedge fund manager. Mudlark has confirmed that the e-mail exchange below – reproduced verbatim apart from minor style changes – is genuine.”

From: Alan Lewis
To: Daniel Loeb
March 22, 2005
Daniel, thanks for calling earlier today. Enclosed is my CV for your review. I look forward to following up with you when you have more time.
Best regards, Alan.
From: Daniel Loeb
To: Alan Lewis
March 28, 2005
What are your three best current European ideas?
From: Alan Lewis
To: Daniel Loeb
March 28, 2005
Daniel, I am sorry but it does not interest me to move forward in this way.
If you wish to have a proper discussion about what you are looking to accomplish in Europe, and see how I might fit in, fine. Lesson One of dealing in Europe: Business is not conducted in the same informal manner as in the U.S.
Best regards, Alan.
From: Daniel Loeb
To: Alan Lewis
March 28, 2005
One idea would suffice.
We are an aggressive, performance-oriented fund looking for bloodthirsty competitive individuals, who show initiative and drive, to make outstanding investments.
This is why I have built Third Point into a $3bn (£1.6bn) fund with average net returns of 30% over 10 years. We find most Brits are a bit set in their ways and prefer to knock back a pint at the pub and go shooting on weekends rather than work hard. Lifestyle choices are important, and knowing one’s limitations with respect to dealing in a competitive environment is too. That is Lesson One 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.
From: Alan Lewis
To: Daniel Loeb
March 28, 2005
Daniel, I guess your reputation is proved correct. I have not been in traditional fund management for more than 11 years. I did not achieve the success I have by knocking back a pint, as you say. I am aggressive, and I do love this business.
I am half-American and half-French, and having spent more than half my life on this side of the pond I think I know a little something about how one conducts business in the U.K. and Europe.
There are many opportunities in the U.K. and Europe, shareholder regard is only beginning to be accepted and understood. However, if you come here and handle it in the same brash way you have in the U.S., I guarantee you will fail. Things are done differently here. Yes, place in society still matters, where one went to school etc. It will take tact and patience (traits you obviously do not have) to succeed in this arena.

Good luck! Alan.
From: Daniel Loeb
To: Alan Lewis
March 28, 2005
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.
From: Alan Lewis
To: Daniel Loeb
March 28, 2005
From: Daniel Loeb
To: Alan Lewis
March 28, 2005

a noted poison pen, part i

This stuff is totally tangential.

– a loeb hedge fund investor (referring to Mr. Loeb’s letters). via nytimes, ‘a noted poison pen

(via danloebletters): Third Point LLC to Mr. Irik P. Sevin Chairman, President and CEO Star Gas Partners L.P.  February 14, 2005. highlights below, reprinted in its entirety @ sec archives.

  • Third Point LLC (“Third Point”) advises certain entities that hold 1,945,500 common units in Star Gas Partners L.P. (“Star Gas” or the “Company”) (NYSE: SGU). Our 6% interest in the common units of the Company makes us your largest unitholder. Unlike the poor, hapless retail investors “stuffed” with purchases at the $24 level (many of whom are party to class action lawsuits against you personally and against the Company), we purchased our stake around these levels and took profits on about 500,000 shares near the $7.00 per unit level.
  • 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 “Irik Sevin Scholarship.” One can only pity the poor student who suffers the indignity of attaching your name to his academic record.)
  • Furthermore, a careful reading of the small print in the Company’s most recent Form 10-K reveals a further record of abysmal corporate governance. In particular, your $650,000 salary for a company your size is indefensible given the spectacular proportions of your failure as an executive.
  • Furthermore, given the magnitude of your salary, perhaps you can explain why the Company paid $41,153 for your professional fees in 2004 and why the Company is paying $9,328 for the 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.”
  • 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. You are conflicted if you take actions or have interests that may make it difficult for you to perform your work for SGP objectively and effectively. Likewise, you are conflicted if you or a member of your family receives personal benefits as a result of your position in SGP…You should avoid even the appearance of such a conflict. For example, there is a likely conflict of interest if you: 1. Cause SGP to engage in business transaction with relatives or friends…”
  • By this clearly stated policy, how is it possible that you selected your elderly 78-year old mom 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 mom 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 mom is the right person to fire you from your job. We are concerned that you have placed your greed and desire to supplement your family income – through the director’s fees of $27,000 and your mom’s $199,000 base salary – ahead of the interests of unitholders.
  • Irik, at this point,… 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. 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. The matter of repairing the mess you have created should be left to professional management and those that have an economic stake in the outcome.

Sincerely,  /s/ Daniel S. Loeb //

the angry investor: an introduction

the new yorker (april 2005) on the snarkfest that is daniel loeb of third point:

Dept. of Noisemaking

The Angry Investor

… no one seems quite as energized these days as Daniel Loeb, the forty-something multimillionaire who has positioned himself as a kind of investor’s H. L. Mencken, dedicated to puncturing the social habits and pretensions of powerful executives from his courtside perch at Third Point L.L.C., a hedge fund on Madison Avenue.

Loeb’s favored device is the scolding letter, formally addressed, publicly released, and ruthlessly frank in its assessments of managerial competence. He writes the boards and C.E.O.s of companies that his fund has invested in, complaining, in effect, that they are not making him and his clients enough money. And, like a certain kind of basketball fan unhappy with an overpaid, underperforming point guard, he recommends, in hyperbolic language (“to ensure you a dazzling place in the firmament of bad management”), that they be replaced—benched. To some degree, his manner is that of the traditional Wall Street crank: swagger and self-interest disguised as moralistic bombast.

What Loeb brings, in terms of value-added, is tacked-on social commentary: the sly references to Brooks Brothers (“out-dated men’s fashions catering to the country club set”) or to “the Appalachian coal men coming with aspirations to wear crocodile skin cowboy boots, silver spurs and ten-gallon hats.” His style—call it hedge-fund populism—has earned him a wide readership that extends far beyond the shareholders and directors who have an interest in the matter at hand. Each new abusive dispatch makes the rounds among financial professionals, as Loeb’s more astute fans and detractors take note of his recurring motifs: chauffeurs, hobnobbing, the phrase “inexplicable insouciance.” …

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exhihit a: letter to CEO of star gas

exhibit b: letter to ken griffin of citadel

exhibit c: email exchange with potential recruit

We Are the One Per Cent

We Are the One Per Cent

(via The New Yorker’s Shouts & Murmurs)

by November 28, 2011. The New Yorker.

Average wealth of the top 1 percent was almost $14 million in 2009, according to a 2011 report from the Economic Policy Institute.
:: Washingtonpost.com ::
Shit is fucked up and bullshit
:: Sign seen at the Occupy Wall Street protest in lower Manhattan ::
We, too, have mobilized.
We come from near and far, by any means necessary, some on private jets, others on extremely large private jets…Our numbers may be smaller than those demonstrating in New York and other cities, but we are still a movement, coalesced around a cause, sleeping two and sometimes three people to a villa.

Perhaps you are wondering what our cause is. Perhaps you’re wondering why we, the richest people on the planet, have come together. Perhaps you’re curious whether what we’re undertaking couldn’t technically be called a vacation. These are all good questions.

We’re angry. We’re angry at something we’re calling “imagined frustration.” By this we mean that, except for Congress, the White House, banks, major lobbyists, and the editorial boards of Fox News and the Wall Street Journal, no one is listening to us. And we’re tired of it.

You claim to know something about us. You think we are rich beyond comprehension, that we can do anything we please at any time, go anywhere we want at a moment’s notice, wander the earth in a state of constant bliss, enjoying abundant and fabulous sex. Perhaps you do know us…

Except for money and the almost unnatural flawlessness of my skin, we are no different, you and I. I don’t know who you are or what you look like or how much money you have in the bank. Nor does it matter. Because we’re just men. Unless you are a woman. Or a child. Or a pony. But ponies don’t read magazines, do they? Unless they’re precocious ponies, like Mister Ed. And he wasn’t real. But I think you get my point. And that is: we are the same, except for the coarseness of the skin on your elbows. Do you know that feeling, upon waking at 4 A.M., heart racing, your mind looking twenty, thirty years down the road, wondering how you are going to make ends meet? Worrying about what would happen if you lost your job, asking yourself how you’re going to pay for your kids’ college or retire? Well, I don’t. But I read a story about it once and remember thinking, I’m so glad that’s not me.

… But when you take off your pants and I take off my pants and we stand facing each other as naked as the day we were born, except for socks, all I would ask is that you feel my skin and tell me it’s not the softest skin you’ve ever felt on a man. And also realize that we are the same, except for the fact that I have four submarines.

Shit is fucked up and bullshit.

We agree.

Except that we would substitute “money” for “shit,” “awesome” for “fucked up,” and “squash courts” for “bullshit,” and add the words “cannot be used for more than ninety minutes. Please respect club rules. Thank you.” ♦

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