I am convinced that Dan Loeb became mellow about his Sony Corporation (NYSE:SNE) (TYO:6758) spinoff campaign after George Clooney, who has movies like “Men Who Stare At Goats” to his credit, vented out his very astute and in-depth analysis of hedge fund industry and activist investors. If you missed it, you are in for a treat, check it out here.
Now Dan Loeb sat down with Variety magazine for a rare interview that was published yesterday. He sounded largely unconcerned about Sony’s rejection of his proposal, which pushed for the spinoff of the company’s underperforming entertainment unit, the one he energetically put forward in Third Point’s quarterly letter which was released only days ago. Loeb’s devil-may-care reaction (okay, it was not that casual) does not conform to his history of bashing company boards who refused to bend to his activist will. He said that he was “actually pleased with the outcome of his efforts”.
Very mellow indeed for someone who made a name in writing stingy letters, for background one can look at the hostile takeovers he has executed at Agribrands, Star Gas Partners, L.P. (NYSE:SGU), Murphy Oil Corporation (NYSE:MUR) and Yahoo! Inc. (NASDAQ:YHOO).
Loeb admires Clooney’s passion
Loeb said to Variety’s Ted Johnson, “I admire Mr. Clooney’s passion for Sony Corporation (NYSE:SNE) (TYO:6758) and his loyalty to Sony and his friends there,”. He said they both have a common goal in better allocation of capital, greater discipline and transparency in the business, adding that, ” I believe our interests are aligned in a way he [Clooney] probably doesn’t realize.”
Clooney accused hedge funds of having no conscience, said Loeb was a carpet bagger and was spreading fear and that he knows nothing about the movie business, and several other things.
Loeb is going to wait and see
Apparently Loeb has chosen to watch and see how things play out at Sony Corporation (NYSE:SNE) (TYO:6758), rather than pulling off any big actions. He said that they expect Sony to release a more detailed plan and timeline of how it intends to improve profits and they will revisit the company’s progress in next year’s shareholder meeting. Third Point will continue to share its valuable insights about increasing shareholder value and keep up dialogue with the company’s board during this time. Loeb said that CEO Hirai’s acceptance that Sony’s margins ‘should’ be higher is a signal that they are on the same page and are recognizing their shortcomings, which they had previously denied.
Sony’s response better than Yahoo’s
Loeb contrasted Sony Corporation (NYSE:SNE) (TYO:6758)’s response from what Yahoo’s back when Loeb was trying to move and shake things there. He said, “Only three months into our investment, Yahoo had completely rebuffed us. The chairman hung up on me in a phone conversation…This is a sharp contrast. The only thing they rebuffed was the spinoff proposal. They took our suggestions seriously and acted on them.”
This time around Loeb refrained from commenting on specific hits and misses by Sony’s production house, saying that he does not feel it would be productive to single out flops at this time. Clooney scored a point here, as Loeb admitted that it is not right to judge movies separately, he said:
“It is probably unfair to focus on one or two bad movies, just in the way that Third Point from time to time can have one or two bad months or a bad year. What is important is the overall profitability and margins over a period of time.”
In Clooney’s diatribe, he said that Loeb criticizes Sony Corporation (NYSE:SNE) (TYO:6758)’s failure in movies like, “After Earth” and “White House Down”, while ignoring the several hits that the company has produced in the past years.
While others may take Loeb’s deflated stance on Sony Corporation (NYSE:SNE) (TYO:6758) spinoff as reasonable thinking and sound judgement but I just prefer to believe that it was the charming speech of twice voted Sexiest Man Alive that brought him to his senses.
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