Of all the places where Dan Loeb could have raised a ruckus, he chose a teachers’ union for his latest war of words. After this sensational start, lets tone it down a little.
To be fair, Loeb is not being his usual stingy self with the Teachers’ Federation that he is famously known for. In fact he appears quite mild mannered in his missive to Council Of Institutional Investors.
We see a dire need to build background here, so here it is: American Federation of Teachers released a security report that has a list of asset managers on the basis of how unfriendly they have been to ‘defined benefit (DB) pension plans’. To be clear, going against defined benefit pension plans is a bad thing for the pensioners.
So how does the Union decide to get back at these evil hedge funds and private equity firms? They decide to release a report that drops heavy hints to all the retired public sector professionals to not invest in these evil wrongdoers. As we know, hedge funds and other asset managers depend greatly on these institutional investors for investments into their funds. So the best way to deter these evil asset managers from their campaign against defined benefit pension plans, would be to drive away crucial asset inflows and that is what Federation of Teachers is doing.
Included in that list is Dan Loeb’s Third Point Capital whose ‘crime’ is that he sits as a director of StudentsFirst New York and has donated to StudentFirst’s political activities. His other wrongdoing is that he is a trustee of the Manhattan Institute. Both StudentFirst and Manhattan Institute are openly against defined benefit pension plans and have advocated and campaigned for alternatives like defined contribution plans.
Now Dan Loeb, in his letter to Anne Sheehan, Chair of the Council of Institutional lnvestors, writes that he has never in his life been against DB plans and nor has the philanthropic organizations he leads. In fact, he was so bummed out by the false reports regarding his inclinations that he chose to cancel his appearance at Spring conference of the Council of Institutional Investors (CII) which is being held today. Additionally he is also not in the mood to have a one-on-one with the pension funds that apparently threatened to confront him at the event, Reuters reports.
In response to Loeb’s letter, Sheehan communicated her regrets and said that, ” [Loeb] is a highly respected asset manager with an excellent track record.” Other asset managers who have been flagged in the report are , Carl Icahn (no surprise there), Paul Singer, Paul Tudor, Alan Fournier, David Tepper and Steve Cohen. All the big names and big firms have been named in the list so it is really a question of who is not on the list.
Most of those included have crossed the line by donating to organizations like StudentsFirst, Manhattan Institute and Show-Me Institute, which is rather unfair because we are sure these organizations do other things besides campaigning against DB plans all day long.
Check out the full list of evil money managers below: