Dan Loeb: The Lost Art of Short Selling, and Why Stock Picking is Back
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What is Dan Loeb's journey from message boards to a hedge fund?
Legendary activist investor Dan Loeb, he of course is the CEO and CIO of Third Point. The lost art of short selling has come back and it's absolutely critical. It doesn't matter what you do, you have to be really selective.
How did Third Point adapt its strategy during market turmoil?
People talk about stock pickers market, this is a bond and credit pickers market. When we were small, our main tool was shame and humor. Dan Loeb turning up the heat on Nestle over the weekend. The shift has really been more towards a dare to be great message. Activism without proxy contests is like Catholicism without hell.
What is the significance of short selling in today's market?
You're very active on the Twitter as well. Oh, well. You found your voice.
A lot of emotion brewing there.
Can we actually start with that? Before Twitter... you were actually quite active, but they were in very different places. I mean, you were in Wall Street Bets before Wall Street Bets existed.
How did Dan Loeb's views on investing evolve over time?
Can you just walk us through your evolution as a public persona?
Sure. I mean, there was this brand new technology that came out called the internet. And really shortly thereafter, long before Reddit or any of these other things, there were a series of chat boards. There was Yahoo, there was something called Silicon Investor, a few other ones, and people would congregate in kibbutz.
What role does AI play in modern investing according to Dan Loeb?
It was done mostly anonymously, and it was an interesting place to exchange ideas. It was really the Wild West. People could pretty much say or do anything, but there was a lot of substance there too. It's not actually that much different than from today.
Did you engage at all in any trolling, per se?
Well, some people use the term OG. Sometimes I say I was the OT.
The original troll.
What are the challenges of investing in the current economic climate?
Yeah. No, I did. I mean, it was fun. I didn't know I was one day going to run institutional money and have a big fund. I was just having fun and blowing off steam. Yeah, it was fun. I mean, investing is fun. And particularly on the short side, I mean, there's so much humor in it when you detect these companies, especially in the 90s. I mean, it was really unsupervised.
How does Dan Loeb approach philanthropy and criminal justice reform?
There were some incredibly fraudulent companies out there, and it was just fun to uncover them and kind of taunt the management teams and ultimately prevail. Yeah.
you have one story above others that kind of stands out in that era?
I mean, there were a bunch. There was... Wow. There was a company called Actrade that I remember run by a guy who was like a repeat fraudster. And we uncovered it. And I know we really got under this person's skin. And ultimately, it was really just a factoring company trading at...
What insights does Dan Loeb share about the future of investing?
five, six, I don't remember what it was, some large multiple of book value. And they had created a new technology called TADS. I don't remember what TAD stood for, but they were basically repackaging factory securities and saying that they had some special technology. They were financing refrigerators and things like that.
Tell us your evolution as an investor. When you started Third Point, I mean, you started with very, very little capital. Now it's almost 30 billion of AUM. You're multi-strat. But you learned at Jefferies. I think, like, you learned helping people like David Tepper allocate capital. Just walk us through how you learned to invest.
Well, I started really fascinated by investing and wanting to do it. I remember when I was 10 years old, my dad was a notoriously bad investor himself. So he didn't give me any good examples. He was a great lawyer, not a great investor. But he took me to meet a broker and I started investing. And then in high school, in the 11th grade, I got a job at the branch office. of Payne Webber working for a guy named Alan Crown who let me post his books and make cold calls. And I think we broke certain securities laws, but I think the statute of limitations is passed. I would trade options on Occidental Petroleum and Teledyne. There was a lot of volatility and I think I had flurries of making money and lost all of it a couple of different times, but it was a good lesson.
I continued doing it in college and then My learning started really formally at Warburg Pincus, where I really learned to value enterprises as my first job, kind of across the spectrum of private equity and venture capital.
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Chapters
8 chapters
1
What is Dan Loeb's journey from message boards to a hedge fund?
0:00–0:13
2
How did Third Point adapt its strategy during market turmoil?
0:13–0:34
3
What is the significance of short selling in today's market?
0:34–0:50
4
How did Dan Loeb's views on investing evolve over time?
0:50–1:19
5
What role does AI play in modern investing according to Dan Loeb?
1:19–1:45
6
What are the challenges of investing in the current economic climate?
1:45–2:13
7
How does Dan Loeb approach philanthropy and criminal justice reform?
2:13–2:58
8
What insights does Dan Loeb share about the future of investing?
2:58–31:03
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