Dan Loeb is having a pretty good 2017. He has told investors of his Third Point Offshore that the hedge fund returned 18.1% net of fees in the first 11 months of the year. His leveraged Ultra Fund is up 28.9%.
With a track record that has remained steady and consistent, Loeb has distinguished himself among hedge fund billionaires, many of whom have struggled mightily in recent years. Unlike many of his peers in the years since the financial crisis, Loeb has avoided making a big mistake.
At 55, Loeb has built one of the top hedge fund firms of the last two decades. His Third Point now manages $18 billion and while his main hedge fund has not been able to beat the U.S. stock market in recent years, it has mostly kept up with the stock market’s rise. Its annualized return since inception in 1995 is just under 16%, nearly double the Standard & Poor’s 500 index.
There was a time when Loeb was known for his fiery personality. Other prominent Wall Street investors of his generation seemed to get more respect. Loeb was the guy lambasting CEOs and directors in public letters and anonymously on web sites. His battles with corporate boards often turned nasty. He even wound up in a feud with actor George Clooney. A yoga enthusiast, Loeb seems to have toned down his approach as he has gotten older, but Loeb’s public comments still cause controversy from time to time. This year Loeb had to apologize for a racially-charged comment he made on Facebook about a New York politician.
The fact, however, is that in the investing business, Loeb has operated skillfully. His net worth is estimated by Forbes at $3.2 billion, far surpassing nearly all hedge fund billionaires his age, like Bill Ackman and David Einhorn, two prominent hedge fund stock pickers whose businesses and track records have hit hard times in the last few years.
While Loeb’s brash style can at times seem off-putting to some, he has always treated his investors with respect. Unlike many hedge fund managers, Loeb did not prevent his investors from redeeming their capital after his funds got hammered in the financial crisis. The redemptions coupled by the losses decimated his hedge fund, but he has since staged one of the great Wall Street comebacks.
In 2017, Loeb’s success in the board room has fueled his investment returns. His biggest U.S. stock holding has been medical supplies company Baxter International, which Loeb approached in a relatively polite way in 2015, resulting in one of his deputies joining the board and helping to recruit a new CEO. The stock is up by 45% in 2017. Third Point has also benefited from its position in what is now DowDuPont. Loeb has been pressing his vision for the company’s break up following the $150 billion merger of Dow and DuPont.
This year Loeb launched a new activist campaign in Europe, nudging Nestle, one of Europe’s largest companies, to accelerate its share repurchases and set a profitability target for the first time.
Loeb also made a big bet on BlackRock in the first half of 2017 that has really worked out, believing its exchange traded fund business is an unstoppable force. Shares of the asset manager have climbed by more than 20% in the last six months. The wave of passive investing has driven many hedge fund managers crazy. But Loeb, a longtime surfer, seems to easily go with the flow.
