Daniel Loeb: fiery activist goes on a buying spree

Daniel Loeb is known as a sharp-tongued investor who buys stakes in companies and then shakes them up. But the pandemic caught him flat-footed and he has changed tack.

Since launching his flagship fund, Third Point, in 1996, activist investor Daniel Loeb has regularly chalked up stellar average annual returns of about 20%. The pandemic looked as if it would put an end to that winning streak  – Loeb candidly admits he was “caught flat-footed by the virus”, says CNBC. But he has spent the past quarter rejigging his portfolio and, assuming the current tech-led wobble doesn’t turn into a full-blown rout, may well end the year sitting pretty.

Loeb appears to have set aside his interventionist instincts in favour of a full-blown push into ecommerce and streaming. “He took advantage of jitters around China’s relationship with Hong Kong and the US” to balance an existing large investment in Amazon with a $600m-plus punt on Chinese e-commerce giants Alibaba and JD.com. But the deal that seems to please him most is a $613m investment in Disney made on the back of the media giant’s move into content streaming, which he says is Disney’s “biggest market opportunity ever”.  

Putting the fear of God into blue-chips

Loeb is the kind of man who “doesn’t take ‘no’ for an answer well”, says Dealbreaker. Perhaps these new moves will soothe the battering his ego has taken from the failure of a high-profile battle with Sony, which has once again rejected his demands “to blow itself up into a bunch of little Sonys”. 

Over the course of a loquacious career, says the Financial Times, the “sharp-tongued activist” has taken swipes at everyone from Warren Buffett (for the disconnect between what he practises and preaches regarding hedge funds) to his former Columbia university classmate, Barack Obama (for the former president’s “smack downs on hard-working successful Americans known as the 2%”). He has feuded with his former mentor, fellow activist Bill Ackman, sued Sotheby’s, helped oust the boss of Yahoo and put the fear of God into the boards of targeted blue-chips from Dow Chemical and Sony to Nestlé. 

Born in Santa Monica in 1961 to a high-powered lawyer and historian, Loeb always had an entrepreneurial streak. At high school he started a skateboard company called “B Industries”. It ran in the family, says Business Insider: his great aunt and uncle founded the toy giant Mattel, thereby earning the distinction of creating the Barbie doll. After reading economics at Columbia, Loeb spent the mid-1980s to mid-1990s cycling through jobs in finance, says the FT: first at Warburg Pincus, and later at Jefferies and Citigroup. In a brief departure from the script, he worked at the record label Island Records before taking the plunge to launch his own fund. Known for his ferocious energy, he once challenged a group of former navy Seals to a triathlon. 

Nicely hedged for the next crisis

“In the pantheon of the masters of the universe,” Loeb remains “one of the more colourful.” But he does appear to have toned down his fieriness in favour of a more conciliatory approach. That worked at Nestlé and may well stand him in good stead in his somewhat surprising latest big foray – into the reinsurance sector. Last month, Loeb’s Third Point Re combined with Sweden’s Sirius in a $3.3bn deal. The timing couldn’t be better, says the FT. “A confluence of global miseries is creating a sort of giddy prosperity and hope for the future of the reinsurance world.” Due to the pandemic, “big ticket buyers have no alternative to purchasing expensive cover”. When the next crisis strikes, at least Loeb will be nicely hedged. 

Recommended

Julian Brigden: markets are at a huge inflexion point
Investment strategy

Julian Brigden: markets are at a huge inflexion point

Merryn talks to Julian Brigden of Macro Intelligence 2 Partners about the unwinding of the US stockmarket's super-bubble, and the risks and opportunit…
25 Jan 2022
Has growth investing had its day? Don’t be so sure
Growth investing

Has growth investing had its day? Don’t be so sure

Markets – and “jam tomorrow” growth stocks in particular – continue to crash, with some analysts forecasting a 50% drop or more. But, says Max King, a…
25 Jan 2022
A cheap investment trust with a good record
Investment trusts

A cheap investment trust with a good record

This cheap investment trust’s yield of almost 9% may look too good to be true, but should be sustainable, says Max King.
25 Jan 2022
Tax return deadline extended – but don't forget to file
Income tax

Tax return deadline extended – but don't forget to file

HMRC is being slightly more lenient about tax returns this year, but falling behind will still incur hefty fines.
25 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022