Strange Case of Dan Loeb and Daniel S. Loeb

“You came to hear my story, I guess,” says Dan Loeb.

It’s 2009, just past the worst of the financial crisis. Loeb is addressing a crowd of nearly 100 assembled at the Jewish Enrichment Center (JEC) in New York to witness that Loeb magic firsthand—and just maybe hear his famously sharp tongue in action.

“But there’s some great stories out there,” he says, deflecting. Loeb speaks haltingly, slowly; with what might even be described as care. He stands behind a podium, his bronzed skin peeking through the top of his unbuttoned shirt, belying a lifelong love of surfing and deep Southern Californian roots.

He’s recently read Rohinton Mistry’s novel A Fine Balance, he tells the audience, and it’s left an impression on him. Two of Mistry’s most interesting characters are from India’s lowest caste—two leather tanners. It’s an important lesson, Loeb explains. “I’m not saying [my story] is better or worse than anybody else’s story. It’s just another story.”

Dan Loeb has reason to be feeling high. It’s June 10th, the New York summer is still tolerable—perfect weather for his triathlon training—and Loeb’s hedge fund, Third Point LLC, is just starting to shake the doldrums of the 2008 recession.

As the crisis unfolded, Loeb’s assets under management tumbled by nearly two thirds. “I felt like [Third Point] was just slipping between my fingers,” he says later in the speech. But two months before, in April, he had taken a trip to Washington, D.C., to better understand the regulations put in place following the crisis. There, he recognized an opportunity deep within his circle of competence. Upon returning to New York, Loeb began hoovering up distressed debt from Chrysler’s finance arm, and from Ford, CIT, and Delphi, among several other bets. By the end of the year, Third Point would be up 45 percent.

By the time of his JEC speech, he feels the tide turning. Dan Loeb is back on board.

Still, he opens the remarks with humility. “Everybody in the room” could tell a story about themselves, he points out. Perhaps Loeb is remembering his liberal arts days at Columbia College and the Aristotelian concept of ethos—the speaker’s imperative of building personal credibility with the audience. He would later say that the lessons he learned from The Iliad, from Plato’s Dialogues, from the Aeneid, stuck with him more than those of his major, economics. “You have to be a little bit of a philosopher to be a good investor,” he explains.

And it works—humble Loeb is disarming and affable. This Loeb, though, may look strikingly unfamiliar to America’s battered CEOs.

And as for that Greek humility?

Loeb’s story, then, is not so easily pinned down. He is alternately the clairvoyant-Transcendental Meditation-practicing-yogi-philanthropist-family man devoted to creating a supportive company culture or a notoriously acid-tongued activist typifying the worst of Wall Street bro assholery.

Wherever you come down, Dan Loeb is worthy of study. Over the past 26 years, he has turned $3.3 million in start-up capital into a hedge fund with more than $20 billion. He personally pioneered a new era of activist investing. He has kept pace with the market’s rate of change, learning and growing in order to succeed even as the landscape has shifted repeatedly under his feet—yielding remarkable consistency. He has compounded at over 15% for over 25 years, creating billions of dollars in value for his investors. He has amassed a multi-billion dollar fortune himself and has been generous in giving it away in support of healthcare, education, and criminal justice reform causes.

Like so many great American stories, Loeb’s begins in California in the 1960s.

Loeb hails from Santa Monica, California, where he grew up “almost bizarrely” fascinated with investing.

His great aunt, Ruth Handler had invented the Barbie doll in 1959 and with her husband Elliott, founded the toy company Mattel. As a result, Loeb came of age with a keen sense of the possibilities of entrepreneurship—which he explored repeatedly.

When he was twelve, Loeb had been inciting trouble with the junior high bullies, and hired a classmate, Robert Schwartz to be his bodyguard for 25 cents a day. Today, Schwartz is managing partner of Third Point Ventures, Loeb’s venture capital arm.

Later on, in high school, Loeb would start his own skateboard company.

At one point, Loeb began scrawling the name Third Point—that of his favorite surf break in Malibu—over and over. “Third Point, Third Point, Third Point” covered his pages, evidence of an early infatuation with finance—and the idea of running his own fund.

Loeb took his fixation a step further at Columbia, trading serious money outside of class. By his senior year, he had earned $120k ($310k in 2021 dollars) in profits. But he lost it all—and then some—in a single bad bet the same year. He had overconcentrated his position, leveraging up his stake and paying the price. His father—a corporate attorney—loaned him money to cover the tax liability of $7,000. Though it took him a decade to repay his debt, the episode imparted learnings that have lasted his entire career. “That was a 10-year lesson in the perils of leverage and overconcentrating positions,” Loeb says.

And indeed, Loeb has shown a perennial unwillingness to leverage Third Point’s positions. “If you take a 10 percent return in a security and lever it up four times,” he has said, “and after financing costs generate 15 or 20 percent returns, you haven’t increased your returns. You’ve just increased your leverage and significantly increased your risk... You’ve also got a 20, 25 percent downside thread.” In the early 2010s he reported that across Third Point’s entire portfolio, debt only amounted to 150% of AUM, lower than peer funds.

After graduating college in 1983, Loeb embarked on his formal finance career, starting with a tour of duty at private equity firm Warburg Pincus. There, as a mentee of John Vogelstein (who would later become Warburg’s vice chair), Loeb learned the basics of finance and then some, finding and pursuing a deal that would earn the firm $20 million in profits. Loeb benefited from the exchange as well, learning from Vogelstein’s business savvy and from his “unequaled integrity.”

Over the ensuing decade, Loeb worked on both the buy and sell sides of the industry, including a stint at Island Records (U2 and Bob Marley’s record label), where he helped to secure a debt financing deal; a stop at the hedge fund Lafer Equity, where he learned the skills of the trade; and Jefferies, where he worked on the profitable bankruptcy financing of Drexel Burnham Lambert, which was famously forced into bankruptcy in 1990. His last stop before setting out on his own was Citicorp, where he sold junk bonds. Each experience helped Loeb build a circle of competence around distressed assets—expertise which would set the stage for the rest of his career.

Despite distinguishing himself early on, Loeb’s upward trajectory wasn’t monotonic. At one point, sometime following his Island Records tenure where he says he learned the importance of “getting out in the world,” Loeb was forced to do just that. Dan Loeb found himself out of work, crashing on a friend’s couch. And, as he searched for a new job for the next nine months, Loeb experienced a feeling he hadn’t since his college days: failure. “I know what it's like to really want to get into something, [and] feel you have doors just being shut to you left and right,” he has said of this period. “Every day was a job looking for that job.”

By 1995, after a decade in finance, Loeb was ready to strike it out on his own. So he hung his shingle in—of all places—the weight room of noted hedge fund manager David Tepper’s New Jersey offices (Loeb had cold called Tepper three years earlier when he was Jefferies, the beginning of a long relationship).

Loeb had set out to raise $10 million dollars to start Third Point, but was only able to cobble together $3.3 million, including $250,000 dollars of his mother’s money (“She doesn’t have a lot”) and $340,000 of his own capital—his entire life savings to that point.

Dan Loeb was set to commence trading on June 1st, 1995. But the night before, Loeb faced a crisis of confidence.

Loeb, the saber-penned tiger of Wall Street, felt like an imposter: what if he couldn’t deliver? His family and friends had trusted him with their hard-earned money. He had even put a down payment on a new house and would now have mortgage payments. “I said, ‘this is crazy,’” Loeb remembered.

But the Third Point wave was about to break. There would be no option now but for Loeb to find his footing.

And after the first month, Third Point was up 8%. “I didn’t have that fraud feeling again,” he said.

Early Days: Dan Loeb in his first office (1995)

Loeb worked hard to keep his costs low, demonstrating the kind of fiscal restraint he would preach to negligent CEOs over the next two and a half decades. His rent to Tepper: $1,000 per month. He installed a single, creaky desk in the space and performed all of his own marketing, investor relations, and administrative tasks himself.

It took Loeb five years to reach $100 million in AUM from Third Point’s $3.3 million start. But things really started taking off after the internet bubble burst, which Loeb correctly shorted. By 2003, Third Point had made it to $1 billion under management.

Loeb built up Third Point with a portfolio well within Loeb’s circle of competence; risk arbitrage positions, distressed debt, and high-yield bonds. “The secret to our success,” Loeb would later say,” is congruence between our investment style and my personal investment style and philosophy, the fundamental elements of which have remained constant over almost 18 years.”

The Third Point/Loeb approach is defined by an “event-driven situation” hypothesis—that is, Loeb picks positions based on expected bankruptcies, restructurings, or other major events that he believes will move prices. At the beginning of Third Point’s run, such events were expected to be endemic to the market. Later, its investment philosophy would expand to include events precipitated by Loeb’s own action.

As Loeb grew Third Point, his circle of competence expanded in step, as did his innovations. Early on leveraged the internet in order to learn and share ideas with fellow investors. Over time, Loeb built a platform which he used to pioneer a new style of activist investing, informed by research as thorough as his use of it was brash. His letters would include pioneering investigations of executives' use of private jets, their personal use of corporate cars, and their time spent on golf courses.

It all began with an investing forum regular who went by the name of Mr. Pink.

Mr. Pink—the character from Quentin Tarantino’s film Reservoir Dogs who steals diamonds and leaves his co-conspirators for dead—has posted nearly 19,000 times on the forum site Silicon Investor since opening his account in 1996. “Mr. Pink,” reads the account’s bio, “shares his wisdom on such diverse topics as spin-offs, mutual thrift and insurance conversions, merger arbitrage, post-bankruptcy equities and short ideas. Mr. Pink does not lie.”

And indeed Mr. Pink does not. In his early days, Loeb-cum-Mr.Pink developed a reputation for frank mud-slinging, which he refined to a science on the platform, earning him a substantial following.

He also won devotees for his lucrative “Mr. Pink’s Picks.” Many were examples of Loeb distressed asset specials.

As Mr. Pink, Loeb learned to engage his audience, honing a dark, insouciant wit. His posts read as proto-Tweets—bites of entertainment as much as vessels of information. The forums provided Loeb an opportunity to iterate; pushing the bounds of social acceptability and getting instant feedback. And decades before Wall Street Bets, Mr. Pink’s posts inspired market-moving action from his readers, earning scrutiny from regulators.

After reading Robert Chapman’s watershed activist letter to the chairman and CEO of American Community Properties Trust lambasting his company as being run like a “real-life version of monopoly,” Loeb saw a glimmer of opportunity. He began pivoting his online prowess to activist letter writing.

Loeb’s letters would be filed as amendments to form 13D, a disclosure required by the SEC of any entity acquiring more than 5% of a public company. In his own first 13D, filed in September 2000, Loeb came out swinging against Bill Stiritz, the well-respected CEO of Agribrands, a pet food and animal feed conglomerate—accusing him of self-dealing and pushing a rotten merger.

Loeb’s tactics raised eyebrows, but proved successful. His agitation earned him a $20 million return. Buoyed by this experience, Loeb became expert in roasting small-cap CEOs. Though these notorious letters brought him fame, he continued posting as Mr. Pink on forums, and in a few notable cases, transcended the medium of written word entirely.

Video produced by Loeb for a Campbell’s soup activist campaign (keep your eyes peeled for a Loeb cameo).

Website Dan created in his activist crusade against Yahoo!

Successful activism relies on the capacity of the investor to induce a change at a target company. In his JEC speech, Loeb refers to three primary means activists use to do this: first, financial levers. Investors can use “financial muscle in one way or another,” including going so far as to acquire a controlling stake in the company. The second means is legal—lawsuits and proxy battles are primary methods here. Finally: social pressure, or ridicule. This is how Loeb gets his desired outcomes: forcing action through public shaming.

Loeb arguably understands how to lever this mechanism better than anyone else in the industry. Let’s look at a prototypical example.

In 2004, Loeb wrote the following to John Collins, the chairman and CEO of InterCept, a technology services vendor:

Loeb chooses violence from the outset, setting his brutal denunciations “your record…is among the worst” against the buttoned-down, legalistic prose typical of such disclosures. Here, he follows the dictum of knowing his audience and writing for their benefit. Fellow hedge funders say that they admire Loeb for his willingness to speak the normally unspoken part out loud. It helps that Loeb’s letters are wildly entertaining to read—particularly if legalistic prose is typical fare.

Also evident is Loeb’s personal glee in using pro forma style to take down underperforming managers. In fact, he had a collection of his letters sent to his high school English teacher.

Loeb’s format flippancy continues throughout: eg. “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.”

Beneath the outrageous style and brazen insults (which, not incidentally, tend to steal the lion's share of news coverage about Loeb’s letters) sit carefully researched and meticulously argued cases. Taking the principle, again, of writing for humans rather than lawyers, Loeb homes in, with crackling indignation, on instances of dubious dealings and brazen nepotism. Some call it ‘hedge-fund populism’.

Make no mistake, Loeb seems to say, ‘I have done the research. There is no hiding from the truth.’ Investigations such as this—relying on phone calls, research into professional and family backgrounds, and deep looks at dubious financial arrangements—figure prominently into Loeb’s letters. His methods ushered in new ways of tracking corporate productivity and malfeasance. For example, Loeb helped to pioneer the practice of tracking executives’ use of private jets.

It is in this milieu, revealing the luxury habits of low-performing CEOs, that Loeb the storyteller is at his strongest. The letters read like white-collar crime dramas; the aesthetic of misdoing usually outweighing the severity of the accusations themselves.

Loeb is highly conscious of his use of strategic framing in his letters.

In a letter rife with flippancy, the imperative of establishing rhetorical credibility is high; the risk of appearing to be a profit-seeking mudslinger is high. Loeb is expert at framing his own character as one of a diligent, concerned shareholder simply seeking information—only to bump up against staggeringly incompetent and unresponsive management.

Underpinning the entertaining style sits a linear fact pattern, clear and carefully constructed.

In this letter, Loeb charges that Intercept CEO John Collins has dealt himself a sweetheart agreement at the expense of shareholders. Loeb proceeds with his “Investigation” by examining the backgrounds of several members of Intercept’s board whom he wishes to disqualify.

Loeb’s ear for populism leads him to decry a recent deal in which the company went into payment processing for pornography. He picks the most extraordinarily salacious parts of the company’s dealings in the space, including “Midget Sex Zone” and uncomfortable attention from the Michigan Attorney General for allegedly providing payments services for child pornography.

He ends with a call to action, a must for any persuasive piece of rhetoric. He demands that the company be sold.

“Sometimes,” Loeb has said, “a town hanging is useful to establish my reputation for future dealings with unscrupulous CEOs.”

By 2007, Loeb had built a reputation as a consistent manager, having delivered over 23.1% net annualized returns since Third Point’s founding. But a storm was brewing. Loeb managed to correctly spot the risk—engaging in a series of risk arbitrage transactions that netted the firm over $100 million in profits as the markets began to slide. But as Third Point’s investors found themselves suffering from liquidity shortages, many pulled assets from Third Point, causing the fund’s assets under management to fall by more than two thirds—from $5.5 to $1.7 billion, $1.4 billion of which was from investor redemptions.

Many other hedge funds chose not to allow redemptions at the height of the financial crisis, an industry practice called ‘gating’. Third Point took the opposite tack, allowing redemptions as needed. Loeb reflects on this moment as crucial in the life of Third Point, because even while AUM fell, Third Point’s relationships grew stronger.

The crisis also presented an opportunity for Loeb to return to his circle of competence. He spotted several opportunities, even early on in the crisis, for his background in distressed assets to shine. During downturns, he wrote in his 2007 Q3 investor letter, “it is important to not become too glum or defensive but to move quickly to capture inefficiencies and to be a bit greedy while your competitors grow fearful.”

Of course, the worst was still to come, with the collapse of Bear Stearns in March 2008 and Lehman Brothers bankruptcy in September of that year.

By the beginning of 2009, Loeb felt confident that the crisis had hit its trough. “In recent weeks,” he wrote in his April 2009 letter, “we have become less pessimistic about the state of the economy.”

He also touted several “distressed debt stakes” in the letter, which he says “are cheap and have defined near-term catalysts.” He refrains from detailing Third Point’s precise positions, though, inviting investors to call anytime to discuss. These positions would define Third Point’s response to the financial crisis and set the course for the fund’s success into the next decade.

During a pivotal trip to Washington, D.C., Loeb met with consultants, lobbyists, and other players familiar with new government stress tests of financial institutions, he recognized upside potential in insurance companies, including the Hartford Group, and big banks like Bank of America and Citigroup.

His core bets, though, were investments in distressed debt—which he purchased from Ford, Chrysler finance company, CIT, and Delphi. He also waded into mortgage-backed securities, which other institutions were staying far away from and which he believed to be underpriced as a result.

As a result of these new positions, things were beginning to turn around at Third Point. “The investors are excited again,” he reported in his June JEC speech. “The team is energized. And I can tell a story to prospective investors such that the outflows have shifted to inflows, and it’s all about staying alive to fight another day and I’m enjoying what I’m doing again, a lot.”

If Loeb’s actions during the financial crisis were defined by a return to his circle of competence, Loeb’s success over the next decade would be shaped by his willingness to push its bounds in search of value. One notable episode begins with Third Point taking a stake in Yahoo, the long-beleaguered search giant.

By September 8, 2011, Loeb wrote to Yahoo!’s board of directors informing them that he would be seeking their imminent replacement.

The letter is notable for Loeb’s virtual cordiality: Yahoo “has been severely damaged,” he writes, “but not irreparabl[y]—by poor management and governance.”

He proceeds by lambasting the board’s recruiting—and slow firing—of Carol Bartz as CEO and its resistance to selling the company to Microsoft. Mismanagement is hardly an unusual target for Loeb, though. More unexpected is Loeb’s reference later in the letter to Yahoo’s substantial stake in a Chinese technology firm with a then-dubious reputation: Alibaba Group.

After a troubled foray into the Chinese search market, Yahoo had decided to partner with a local firm to provide search services to the Chinese market to supplement the email and instant messaging products it offered there. In 2005, Yahoo founder Jerry Yang inked a deal with Jack Ma to buy 40% of Alibaba for what at the time was a shocking sum—$1 billion.

Six years later, Loeb terms Yahoo’s Alibaba holding “The Obscured Value in an Iconic American Technology Asset.” Alibaba, Loeb believes, is well positioned to benefit from the exploding Chinese e-commerce market. He would later say that this was the reason for Third Point’s Yahoo purchase. “We currently estimate a pre-tax value for Alibaba Group of $25 billion,” Loeb writes in the 2011 letter. “Given Alibaba Group’s growth potential and market share, it is entirely conceivable that Yahoo’s 40% fully diluted stake in Alibaba Group could double in value over the next 2-3 years, highlighting its tremendous value.”

For an example of what to expect, check out their previous writeup on Sea Limited.

Loeb was, of course, right on the money. Alibaba’s value would grow nearly 10-fold by the time of its 2014 IPO (3 years and 10 days after his he published the letter).

At the time, Loeb laid out his case for Alibaba via Yahoo with a colorful presentation for the board.

Loeb further explained his interest in Alibaba in his investment letter from Q4 of that year.

Loeb’s position in Alibaba by way of Yahoo marked a departure from Third Point’s signature investments in small-cap companies and distressed assets. Alibaba sits about as far from Loeb’s (then-Madison Avenue, now Hudson Yards) offices as it did from his circle of competence.

But led by his nose for value, Loeb’s step out East would prove wildly successful. So much so that Loeb would be in and out of Alibaba repeatedly over the next decade.

His perennial BABA trading over the decade, always driven by events, marked a new kind of investment for Loeb, and an extraordinary statement of his belief in its value. Never before had he reinitiated positions in a single company so many times over such a long time horizon.

Just as he recognized value in Yahoo’s holdings in Alibaba, Loeb recognized that Alibaba’s hidden value lay in its subsidiary businesses. In his third quarter 2014 investor letter, Loeb laid out his case for Aliyun/Alibaba Cloud computing, China Smart Logistics (Alibaba’s logistics arm), and AliPay, Alibaba’s payment service.

By 2017, Alibaba’s market cap was approaching $400 billion and Third Point reinitiated its position. At this point—in his Q2 2017 investor letter—Loeb argued that changes to Alibaba’s advertising model presented an “important catalyst for meaningful revenue acceleration over the next few years.” By the end of the next quarter, Third Point’s in BABA would be worth $1.1 billion.

Loeb’s repeat positions in Alibaba marked a re-calibrated approach. For one thing, Alibaba was one of the first major positions that Third Point had built in an Asian company.

Though it wouldn’t be the first time Loeb had taken positions in high-quality companies (others over the years have included Visa, Adobe, and Salesforce), Third Point’s position in Alibaba marked a meaningful departure away from his typical activist targets (small caps specifically) and towards buy-and-hold, high-quality companies, which he terms “compounders”. Even if Third Point had had the requisite capital to acquire a meaningful stake in Alibaba and if Loeb had thought management changes were necessary, by virtue of him holding an ADR (American Depositary Receipt) in Alibaba, he didn’t technically own the company and his ability to agitate for changes in corporate governance would have been greatly reduced.

This was a different kind of play. In a 2020 investor letter, Loeb explained his evolving philosophy.

In that same 2020 letter, Loeb announces yet another reinitiated stake in Alibaba, this time driven by his bullish view of Alibaba’s cloud computing business, and of its 33% stake in Ant Financial, which was set to go public by the end of the year.

Third Point has exited BABA as of first quarter 2021, likely due to Ant’s IPO falling through as well as rising anti-monopoly regulations in China.

For a fresh take on BABA’s investment merits, check out KG’s DJY Research, which just published an in-depth research report on the company.

First 30 people to email us will get 10% off a subscription.

Loeb’s relentless search for value, even far afield—both geographically and philosophically—led him to first recognize value in Alibaba. At the time, in 2011, his was a contrarian case. Many other smart observers were dismissing Alibaba and Taobao as disreputable companies purveying fake Chinese goods. Loeb saw past this.

Recognizing that valuable embedded business within other companies would lead those companies to be undervalued (Yahoo in this case) echoes an approach he first took with internet companies in the 1990s.

In Yahoo, Loeb thought he had found a great target for activism. Instead, he found his way into Alibaba, a company that led him to learn and evolve his investing philosophy. It also led him East for the first time.

Third Point’s later positions in Chinese companies would include a 2016 Didi buy (then a private company) and a 2020 position in JD.

In Q2 2020, Loeb announced that Third Point had taken a position in a company closer to home. Perhaps inspired by the Disney nostalgia from his L.A. childhood or perhaps driven by a COVID-related downgrade of the stock and his conviction in the growth potential of Disney+ (definitely the latter), Third Point built a position in Disney now worth $730 million, or roughly 0.2% of the company.

Though a classic event-driven buy, Third Point’s Disney stake is representative of Loeb’s shift to compounder businesses. Though in this case the business had been compounding more than he preferred. In October 2020, Loeb opened his notorious poison pen drawer to author a letter to Disney’s new CEO, Bob Chapek, advocating for an end to Disney’s dividend payout.

Loeb devotees may be forgiven for wondering where the castigation begins. But it never does—the Loeb poison has lost a bit of its bite. In fact, Loeb seems to want to ingratiate himself with management. His Chapek letter is distinctive not only for this reason (eg. his un-Loebian use of the adjectives “laudable,” “admirable,” and “constructive”), but because CEOs opening letters from activists can typically expect demands for increased dividend payouts rather than the opposite.

Redirecting its $3 billion annual dividend payout to content production, Loeb argues, would “double…[the] Disney+ original content budget. These incremental dollars would, based on our analysis, generate returns that are multiples of the stock’s current dividend yield by driving high life-time value (“LTV”) subscribers to your DTC platform.”

Loeb’s argument is linear and clear as ever.

The case is as compelling as it is simple: his proposed investment in content will increase user engagement, help with subscriber retention, and make it possible to charge more. This section even includes a hint of humble Loeb— “you have better insight [into the math] than we do,” he acknowledges when making rough projections.

At one point, Loeb even demonstrates charity.

Loeb signs off emphasizing the need for a quick transition to the company’s digital future.

Another notable trade from this most recent era is in chipmaker Intel—though not because of the position’s size. Third Point’s purchase of 1 million shares worth a total of $50 million don’t leave it with much voting power or the requirement of submitting a 13D. However, as with Disney, Loeb chose to publish one anyway.

Loeb’s letter is short and to the point: Intel has lost its dominance in the semiconductor market. Loeb says the company must regain it by shaking up its management—for the sake of the country as well as its shareholders. “Without immediate change at Intel,” Loeb writes, “we fear that America’s access to leading-edge semiconductor supply will erode, forcing the U.S. to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure and more.”

Loeb shows flashes of the venom from the decade earlier: “From a governance point of view, we cannot fathom how the boards who presided over Intel’s decline could have permitted management to fritter away the Company’s leading market position while simultaneously rewarding them handsomely with extravagant compensation packages…”

He reigns it in a bit though, allowing that the board chairman, Omar Ishrak, had only recently joined the board and therefore should not be held completely responsible for the state of the company.

After entering Intel at around $49, the stock now sits at roughly $56. The company has a new CEO as of February 2021, Pat Gelsinger (of whom Loeb approves). Loeb expects to be a long-term Intel shareholder.

Loeb’s recurrent pattern of growth and return to first principles has characterized his career. Now, at 59 years old, Loeb is still working to expand his comfort zone. Nowhere is this better evidenced than on Twitter—where Loeb has become a champion of cryptocurrency.

Twitter Loeb is Mr. Pink all grown up. The candor and the wisdom—pointing users to ideas he finds interesting, for example—remains. But gone is the name calling (see misunderstood use of “degen” below). He even shares reflective moments.

On Twitter, Loeb straddles the worlds of traditional investing and crypto. Fault lines have opened up between the two, for example around the communities’ respective stances on Warren Buffett and Charlie Munger. Munger has called crypto “rat poison” and Buffett “rat poison squared.” Still beloved by the traditional investing community, Buffett and Munger have been portrayed as out-of-touch fogies by crypto world.

It’s clear that Loeb reveres Buffett and Munger, having quoted them repeatedly over the years. But he’s not afraid to push back on ideas that he disagrees with—their rejection of crypto and Buffett’s 2015 denunciation of hedge funds and activists investors are prime examples.

This discourse has seen a different side of Loeb emerge—Dan Loeb, seeker of nuance.

In the exchange below, despite his broad disagreement with Munger’s position, he still offers the following defense.

Dan’s Response:

Lest Mr. Pink fans despair, the Loeb of old is still out there—somewhere.

He liked this response to one of his now-deleted tweets:

He also liked the following tweet:

And responded with now-deleted tweet of his own:

A few months before starting Third Point, Loeb began practicing a form of yoga called Ashtanga yoga. Most think of yoga as a calming, if slightly woo-woo, activity. Coverage of Loeb often mentions his yoga habit as a contrast to his ‘wolf of wall street’ persona.

Ashtanga yoga is a bit different, though. It’s an athletic, highly demanding practice. Its founder, K. Pattabhi Jois, was known for giving his students such violent “adjustments” to their poses that he would sometimes cause serious injury. Ashtanga—practiced at 5:30 in the morning as Loeb is known to do—requires grit, determination, and strength. It’s not for the faint of heart.

Neither are Loeb’s other pastimes. He has competed in multiple triathlons, including an episode in which he challenged three Navy SEALs. He also surfs. A lot.

Surfing the Mentawi Islands - his second favorite surf spot (2009)

His devotion to these activities is no mere passing fad. Five months after starting Third Point in 1995, Loeb traveled to India to study yoga with a master teacher for a full month. Contrary to the popular connotations of these activities, Loeb says, they have been essential in making him a more effective manager.

Loeb believes so deeply in physical and emotional health that he has crafted opportunities for his team members to pursue similar endeavors of their own.

Loeb has also received attention for his sprawling philanthropic profile.

As in his other professional and personal endeavors, Loeb doesn’t tread lightly in the philanthropic space. He has called his philanthropic style “activist philanthropy,” dubbing it a “hard hitting” team sport.

He has supported education reform as an ardent cheerleader for charter schools. He currently sits on the board of Success Academy Charter Schools, a school operator in New York. He’s also given substantial support to Jewish and Israel causes, criminal justice reform and LGBT rights.

In his activist philanthropy, Loeb leans on many similar analytical tools he uses to gauge the impact of the investments he makes at his day job, including constant learning and the use of “evidence, data, and logic” to evaluate the efficacy of every decision.

Through his philanthropic work, Loeb has also furthered a series of relationships with other prominent hedge funders, including Carl Icahn. In 2014, Loeb gave $15 million to the Icahn School of Medicine at Mt. Sinai to establish the Ronald M. Loeb Center for Alzheimer’s Disease, in honor of his father who passed away from Alzheimer’s.

He has also worked closely with fellow activist investor Paul Singer, also the chairman of the Manhattan Institute, a New York-based conservative think tank, on his political agenda. After supporting his former Columbia classmate Barack Obama in 2008, Loeb is now a major donor to Republican candidates across the country.

Loeb is also known for talking about the importance of his family. He married his wife, Margaret Munzer Loeb, in 2004. She shares in the practice of yoga and is a trained social worker. Together they have two children.

Loeb ends his JEC speech by thanking his wife for coming, with a little jab. “I’ve never spoken so much in a time that my wife so little, probably in our entire marriage. So thank you, honey, for coming.”

Loeb had opened the same speech by reflecting on the universality of stories. Everyone has one, he told the audience. And the quality of those stories do not automatically correspond to social position.

What he doesn’t say is that he’s thought a lot about stories. He’s been shaped by the story of his family, by the greatest stories known to humankind—those of Homer, Plato, and Virgil—and by his own stories about himself.

Whether about Mr. Pink, the all-knowing online stock picker, or about failed management, Loeb is in the business of crafting stories. If distressed assets occupy the center of his circle of competence, storytelling is there just to one side as well. In a 2010 investor letter, Loeb lets on just how conscious he is of the power of story with the following analysis of an interview with then-Fed chairman Ben Bernanke.

Stories have defined Loeb’s rise. The story of the CEO-vanquishing hedge fund manager rocketed him to fame. The one about a lifelong learner searching for value the world over has kept him there, delivering returns year after year.

Unlike the narrative arcs of his legendary letters, Loeb’s story isn’t so clean. The absolute truth of it isn’t easy to come by. And he’s okay with that.

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This has been the first chapter of Cloud Valley. We’re building the world’s first cloud museum; a collection of stories about the all-time greats of investing, business and tech. We’ll be exploring their defining moments, investments, and life decisions to understand how they tick.

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KG and DS