Bruce Berkowitz. I have no scientific polling to prove this, but I get the feeling that most people side with David Einhorn on JOE. If anyone is unfamiliar with this story, check out a previous article I wrote on the topic.
However, despite the fierce “controversy” regarding the stock, it overall has been quite civil. It is surprising that no one in the value world has written about the not so civil actions of Dan Loeb towards the “Warren Buffett of Canada”, Prem Watsa. So let’s get to the latest value world drama, which I find as entertaining as the whole JOE debate.
After taking a brief look at some of the emails that Dan Loeb had sent around almost a decade ago, many casual individuals might think that it was nothing more than simple exchanges amongst friends. After all, some might not like the fact that a person in his position of power as the head of the hedge fund, entitled Third Point LLC, was sending off messages about business in general and other companies including curse words. However, while it may not be the nicest thing to do, it isn’t against the law to write private emails which include vulgar material. Dan Loeb is not the person you want to get on the bad side of (if you want confirmation of this fact, check out this link), and I think he is a spectacular investor, but he sometimes makes absurd comments. I hope he or no one who knows him personally is reading this article.
Assets in private equity and venture capital strategies have seen significant growth in recent years. In comparison, assets in the hedge fund industry have experienced slowing growth rates. Q2 2021 hedge fund letters, conferences and more Over the six years to the end of 2020, hedge fund assets increased at a compound annual growth rate Read More
Back to the story…
In 2006, Loeb shorted Fairfax (Prem Watsa’s company) stock and bonds. In emails recently leaked, Dan Loeb wrote in an email addressed to someone researching Fairfax: “die, Prem Die!” Watsa later sued Loeb, Jim Chanos and Jim Simons for “conspiring” to bring down Fairfax by comparing it to Enron. It turned out Fairfax seems to be performing very well, and the stock is still alive and well five years later.
I admit that while reading some of the details of this specific story (much more entertaining Charlie Sheen nonsense), there were a few times that I just felt like I didn’t even like Dan Loeb. I mean, I don’t know him; I’ve never personally worked with him or met him, but at the same time his remarks have been outrageous at times, calling Watsa “Hitler Himself”. It could be the press and the framing of the information that I read, but I just don’t think that this guy is anything but rude and unprofessional. He is a playground bully.
That being said, it is always best to keep feelings out of the equation because when we start to judge things on how they “feel” and on how we “believe” the specifics, it becomes unfair as it is no longer an objective viewpoint. Therefore, I want to make it clear that I am not condemning Dan Loeb just because he acted like a jerk. In fact, when Reuters asked one of Dan Loeb’s friends (and one of the parties guilty of writing “locker room humor” as listed by Reuters), he apparently responded in an email, “it seems beneath your organization to write about something so trivial and meaningless.”
Moving on from the pure mudslinging and vulgarity, it becomes worse when the article lists some more specifics. Loeb had apparently made a few racist comments, which start to take this specific story from a little crude fun to a different plane; one that makes to feel almost any investor or individual uneasy in general.
It does have merit to at least list a point in this discussion; many people have come forward claiming that Loeb himself has tried to change his image and the way he conducts himself. It can be believed as well that someone could change in a full decade and grow up in that time period. Roger Lowenstein made very harsh remarks about Bruce Greenwald in 1992. In my recent interview with Roger Lowenstein, he said that those remarks were made 19 years ago, and Bruce Greenwald has grown a lot since then.
The same could be the case with Loeb; After all, these emails were from early 2006, which was more than a few years ago to say the least. He has become a husband (and has been for seven years) as well as a father of three children since that time; so, maybe he did grow up.
Overall it should be noted the Loeb does have some credibility in this. He has been a pretty well-known and up and coming player in the market at least since this issue with Fairfax. It should also be known that he was right when he stated that when someone is going short on a company, it is almost imperative to uncover whatever they can about the company at hand. It is part of the process to uncover each and every bit of information so that they can clarify the reasons and rationale that they are shorting said company in the first place.
So, while the emails that have since come to light (and the ones that still may come out) continue to do damage to Loeb’s recently rebuilt image, it is most important to say that this issue is far from over. It appears that you have to watch what you say everywhere, including the internet and even in private emails; even if you run one of the most successful hedge funds in the world.