10/30/13 - FINalternatives - Report: Loeb Detained In Cuba After '02 Car Accident
Daniel Loeb struck a child with his car during a 2002 vacation in Cuba and
was detained in the country for several weeks, according to a new and
not-at-all complimentary profile of the Third Point founder in Vanity Fair.
Loeb had travelled to the country-which is under a strict U.S. embargo-with
friends for a long weekend. But, according to VF, the trip "took a dark
turn" when Loeb hit a child. The magazine cites a breach-of-contract
lawsuit filed by a former Third Point analyst that alleged "Cuban
authorities had refused to allow him to leave."
According to his former friend, fellow hedge fund manager Robert Chapman,
Loeb was confined to his hotel room after the accident. "I remember how
scared Dan sounded when describing the incident involving his hitting a
local Cuban kid with his car. I truly felt sorry for him when he told me he
had found himself unable to leave the country, curled up in a ball on the
floor of his room crying, promising God that he'd do anything if the
Almighty got him out of his predicament." The incident is also recounted in
an forthcoming book, House of Outrageous Fortune by Michael Gross, which
alleges that he "ended up in jail until he was bailed out by another
financier" seven weeks later.
Loeb acknowledged that he had been involved in an accident and that
everything turned out fine after a legal hearing and a couple of extra
weeks in Cuba. But his lawyer denied that he had ever been arrested or
spent time in jail.
"The statements you attribute to Mr. Chapman, Gross and an 'unidentified
source' are entirely untrue, defamatory and libelous, and will be treated
as such," Matthew Dontzin told the New York Post. A friend of Loeb's, who
says he was on the trip to Cuba, added, "I state categorically that Daniel
was never in jail... and that the child involved in the accident was not
In his interview with VF, Chapman did not stop with his description of the
Cuba incident, although he may have been referring to it when he said,
"I've heard it said that yoga is Dan's form of paying penance for what he
does while outside the home, whether it be the office or elsewhere. It's
like his way of self-purging."
"Given Dan's extraordinary success, his behavior can be extraordinarily
odd, and coming from me that says something," Chapman said. "If I had to
guess, he sees himself as a phenomenal filterer of other people's
investment ideas, and maybe that's the source of a behavior normally
attendant on someone hopelessly insecure."
Others attribute that behavior to what might be called sociopathy. A
longtime colleague told VF that Loeb "can write the most obnoxious letters
on the planet, make shit up" because he does "not really care" whether or
not he hurts people.
His letters "were juvenile, sophomoric and cringe-making. Horrible. If
you're a decent member of society," the colleague said, you don't do "shit
like that. But he did. That was his business strategy."
"Other people-most of us-have certain values and certain norms, and there
are certain boundaries we just wouldn't cross. And he just obviously
doesn't have those same kind of limitations. Never has."
"We all know what his niche is: He is just long and loud," another Wall
Streeter who has known Loeb for decades said.
"He was smart to occupy a place that was really left vacant: All the
private-equity funds and the banks had to get out of hostile deals, and it
was left to the guys who didn't give a crap, knew how to do it, and had
nothing that they were compromising or putting in jeopardy by taking on
those powers. Carl Icahn didn't give a fuck. Dan Loeb didn't give a fuck.
I don't think anyone's ever said Dan's a really, really brilliant guy, but
this is what the hedge fund world allows you to be if you're massively
ambitious and you're kind of really, really, really focused."
"Here's the thing about Dan. He's smart not in the way of some 180 I.Q. kid
from MIT who immediately grasps complex derivatives or investment
scenarios," Chapman said. "His brain is not wired that way. However, he
does have unparalleled judgment on when, why and how much capital to deploy
in a particular investment-what's going to work and what's not going to
Usually, anyway: Chapman said he thinks Loeb allowed Pershing Square
Capital Management's William Ackman outthink him on nutritional supplements
company Herbalife, a position Loeb exited far short of his price target for
"I think Loeb let the Ackman Jedi mind trick penetrate his mind and then
just panicked," Chapman said. "He may even have sold his stock to Icahn
without knowing it. In this one case, Loeb's instinct failed him."
A source who described himself as a friend of Loeb's told VF that Loeb's
name-calling of Ackman is "massively stupid on multiple dimensions" and a
sign that Loeb is allowing his baser instincts free rein.
"Loeb very successfully for many years toned things down in a way that a
lot of institutional investors would think, OK, whatever. So it's like he's
going back; he's undoing 10 years of hard work to present a more polished,
VF tells a February encounter between the two men-at its own Academy Awards
party-in which Ackman approached Loeb, said hello, and then told him that
"you really shouldn't have done that," in reference to Loeb's attempt to
force a short-squeeze in Herbalife, which Ackman has called a pyramid
"Why? I made $50 million. What's wrong with that?" Loeb shot back. The two
former friends have not spoken since.
"Why would you go make an enemy out of Bill Ackman?" the friend asked.
The VF article posits two possible answers to that question: That it's who
Loeb is, and that, having survived major losses during the financial crisis
and become more successful than ever, his ego is as large as ever.
"When Dan's relaxed-comfortable-he's vulgar," a Loeb associate said. "Like
what you'd imagine in an investment community: 'By the way, show this-stick
it up his ass.' 'Fuck him.' 'I ain't taking on this piece of shit.'"
The friend says that Loeb "never, ever in a million years" would have
sought to publicly humiliate someone "back in 2008 when he was down nearly
50% and nearly blew up. That was a humble Dan Loeb, who never would have
gone out making enemies needlessly."
"The guy almost went out of business in 2008," another hedge fund manager
said. "I think what happened was he had a couple of good years. He bounced
back. He put up some good numbers, and I just think his ego has gotten so
out of control."
"With the fund doing well, I just think it's completely gone to his head,
and he surrounds himself with a bunch of sycophants."
VF describes a hedge fund maven dreaming of nearly tripling his assets
under management to $40 billion, trying to get reporters fired and picking
fights with powerful institutional investors. One hedge fund manager called
him "the Kanye [West] of Wall Street-crazy insecure despite the enormous
success and celebrity."
"I think Loeb has got an enormous ego," another hedge-fund competitor said.
"I think he's got a bit of a Napoleonic thing. And I think he's a very
calculating, Machiavellian guy."
"What happens to some people when they make a ton of money is they get this
feeling of invulnerability, and I can do anything, say anything, behave any
way I want, and I can get away with it."
Original Source / Fuente Original:
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