In 1989, Loeb was out of work for nine months. “Every day was a job, looking for that job,” he’s said. Two jobs later, in 1991, he landed at Jeffries & Co., which was picking up the pieces of the high-yield bond market after the collapse of Drexel Burnham Lambert. Loeb demonstrated both a demonic work ethic and a talent for networking, earned enough to buy a two-family mews house on MacDougal Alley in Greenwich Village for $850,000 and converted it to a single residence.
Loeb decided he wanted to start his own fund. Comparing himself to a lovesick schoolgirl, he recalled writing its name “over and over on a piece of paper, Third Point Partners, Third Point Partners, Third Point Partners.” He even designed a logo. He took one last job trading junk at Citicorp Securities before he finally set up Third Point at age thirty-four in 1995 with $3.3 million, a third of it his own. “The night before I started,” he’s said, “I absolutely panicked. ‘What am I doing? I’m a fraud.’ My mom gave me 250 grand. I’d just bought a home. I had a mortgage.” But after a month, he was up 8 percent and the fear seeped away.
In the midnineties, Loeb had started expressing his opinions about publicly traded securities on Internet bulletin boards, hiding behind fake names or, in Web lingo, sock puppets: “John_Crimiakis_StockSwindler” and “Mr. Pink,” the latter the name of one of the crooks in Quentin Tarantino’s film Reservoir Dogs. Mr. Pink listed his occupation as Minister of Truth and his job title as Lord of All Things. A post by Mr. Pink once led to a lawsuit, later settled, charging Loeb with damaging a Web company called Hitsgalore.com by, among other things, referring to it as sHITT (it’s ticker symbol was HITT) and writing of its owners, “These crooks belong in jail.” Loeb has told various stories about Mr. Pink’s real identity, but in a declaration in the Hitsgalore litigation, he admitted, “I wrote the Internet bulletin board postings . . . under my screen name of Mr. Pink.”
One Internet blogger claims that Loeb had another, even snarkier sock puppet, posting under the name Senor_Pinche_Wey (a slur in Spanish slang) during a campaign against a publicly traded drug-development company in Florida. Pinche_Wey called one of its executives a “mega scum bag” and wrote of its chairman, Lisa Krinsky, “I will reciprocate felatoin [sic] with Lisa even though she has fat thighs, a fake medical degree, ‘queefs’ and has poor feminine hygiene.” In 2008, an appeals court in California barred Krinsky’s attempt to get Yahoo!, which ran that investor board, to reveal the identity of the pseudonymous posters, one of ten who’d written what the court deemed “scathing verbal attacks” on her and others. One had moved to quash her subpoena, but the trial court denied the motion. So the poster appealed, contending that he had a First Amendment right to speak anonymously on the Internet.
In its ruling upholding that right the appeals court quoted a mention of Loeb in one post: “[F]unny and rather sad that the losers who post here are supporting a management consisting of boobs, losers and crooks . . . while criticizing a charitable and successful hedge fund manager, who, unlike his critics and the longs here, has done his homework. . . . No, Loeb earned his $ $ $ and those of you who are whimpering on each other’s [sic] shoulders crying to be saved . . . are a bunch of pathetic losers.” Though the court called the posts “juvenile name-calling,” the poster won the right to protect his identity.
The Pinche_Wey–Pink-Loeb connection was made by Judd Bagley, a self-styled investigative blogger with an open animus toward short-sellers. He says Loeb has never challenged his claim. “I wish he would,” Bagley says. “I’d love to depose him.”
In 2000, Loeb took a cue from another activist hedge fund runner, who attached an incendiary letter of complaint about a company to a public SEC filing (a 13D, which is required whenever an investor buys or sells shares if he or she owns over 5 percent of a company’s stock and is trying to influence how it does business). Loeb stepped out from behind the curtain and began penning 13D letters himself. He later expanded his oeuvre of clever outrage in letters to Third Point investors that, inevitably, went viral.
By then, Loeb had left behind his other reputation as a player. Slight and slope-shouldered, but five feet nine and fit (besides surfing, he runs triathlons and is a devotee of Ashtanga yoga), he has brown hair speckled with gray and the handsome face of a pretty-boy boxer who’s never taken one on the nose. He was portrayed as a horny “Mr. Hedge Fund” in a 2001 article on yoga fanatics by Vanessa Grigoriadis in New York magazine. Though she won’t confirm it, Loeb is said to still be furious over her portrayal of him. “I’m like Rambo in the office, headset on, three computers in front of me, mowing them all down,” he proudly told her. “Yoga is all about focus and perfect aim.”
Another woman, an ex-employee of Third Point, portrayed Loeb in an even darker light two years later, when she sued him and his hedge fund in federal court in Manhattan after she was fired, describing him as “unstable” and his behavior as “particularly abusive and erratic.” In her complaint, the analyst said she’d tried to resign a few months before she was dismissed, but was convinced to stay with a promise of bonuses she never received. (She would ultimately make a confidential settlement.)
The immediate cause of her aborted resignation was a trip Loeb took to Cuba in March 2002 during one of the intermittent thaws in its relations with the American government. Though planned as a long weekend, that trip stretched into a seven-week stay, she said, after Cuban authorities “refused to allow him to leave” and Loeb told his staff “he would be detained there indefinitely.” Though “the precise circumstances remain murky,” the complaint said, some of Loeb’s business associates and friends say he told them he’d been in a car crash in which a child was injured. One reported that he’d spent several days in jail until he was bailed out by another young financier, the designer Diane von Furstenberg’s son Alex, who’d been traveling with him on what Loeb had described as a guy’s surfing trip.
Robert Chapman Jr., a California hedgie who was then friends with Loeb, told Vanity Fair Loeb called from his Cuban hotel room, “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.” For his part, Loeb confirmed to the writer William D. Cohan that he had been involved in a car accident, had a legal hearing, and everything turned out fine.
Remarkably, the incident enhanced his reputation. Though someone who worked at Third Point at the time denies this, two unrelated sources, a longtime friend and a competitor, both say he’d left standing orders that if his Third Point team lost contact with him for any reason, they were to cash out all positions in its funds until further notice. Fortunately for Loeb, both sources say, his absence triggered such a sell-off, which coincided with a steep drop in the stock market. “He made a lot of money as a result,” says the competitor, who is often described as a friend of Loeb’s but adds, “I don’t know what being friends with Dan means.”
Loeb’s life changed radically after his Cuban misadventure, perhaps due to his vow to God. In 2004, he married Margaret Munzer, a brown-haired beauty with rosy cheeks about a decade his junior. A graduate of Brown and the School of Social Work at New York University, she is said to have worked as a yoga instructor, but now gives her occupation as mother and homemaker.
Loeb developed a spiritual enthusiasm around that time or at least made it a visible part of his life for the first time. The couple was married at his Rafael Viñoly–designed beach house by Rabbi Heshy Blumstein, the leader of an Orthodox Jewish synagogue. Under Blumstein’s tutelage, Loeb began studying the holy texts of Judaism. Before that, he said in a 2009 speech made at a venue called the Jewish Enrichment Center, he’d been “much more identified with my day-to-day, moment-to-moment activities.” But after beginning religious studies, it was “the first time in my life when I had a framework that I could refer to . . . that’s not just bigger than us but kind of lays out for us a set of principles that you could apply to your life.” Loeb then segued to describing his bachelor years. “I was having a good time, I thought, but you k
now what? I’ve had a much better time being a family guy.” Loeb said that, ever since, he’d assumed a “very principled approach” to business.
But Loeb kept making caustic comments about business colleagues, and his words kept stirring up trouble. In 2005, he pulled out his poison pen again when a rival fund manager, Ken Griffin of Citadel Group in Chicago, tried to hire away some of his employees. Loeb’s letter accused Griffin of running his “bloated,” “over-rated firm” like a gulag, treating his staff like indentured servants, and surrounding himself with sycophants and “people who . . . despise and resent you.” That blast makes it particularly intriguing that Griffin briefly considered buying a 15CPW apartment, then rented a pied-à-terre, unit 9B. Building staff knew of the Griffin–Loeb feud but not if they ever crossed paths in the lobby or restaurant.
Public records about the unit Griffin rented give a sense of how well ownership of a New York condo can be hidden by a determined buyer. In 2008, when the purchase of apartment 9B closed, one local newspaper reported that its owner was a New Jersey tech company CEO named Betty Lau, which appeared to be the name scrawled on filed paperwork as the president of Olmsted Holdings, Inc., which had bought the apartment (and is likely named after the designer of Central Park). But a careful check of filings shows Olmsted is a British Virgin Island corporation and a Betty Casazza of Queens, New York, is its president and sole director. She is also chairman and CEO of Kensington Investments, Ltd., formed in Delaware in 1986, apparently to buy a town house at 37 West Seventy-Fourth Street. Tax bills for the apartment at 15CPW are sent to a Peggy Zalamea at that same address. Zalamea, a graduate of Harvard Business School, is a relative of Cesar Zalamea, the onetime chairman of the Development Bank of the Philippines, and a longtime executive of AIG, the too-big-to-fail insurance company. An internal Zeckendorf sales document read to the author by another apartment purchaser shows that 9B is owned by Suthira Zalamea, Cesar’s wife. There are frequent references to Cesar Zalamea, who owned an apartment at the Galleria on East Fifty-Seventh Street for a few years in the 1970s, in accounts of the years-long efforts of the Philippine government to recover the late strongman Ferdinand Marcos’s billions.
Around the same time as his blast at Zalamea’s tenant Griffin, Loeb responded to a job seeker whose tone annoyed him, jabbing the applicant with insults in an e-mail exchange that, like many of his screeds, was promptly e-mailed around the world. When the job seeker suggested that Loeb’s informality and brashness wouldn’t play well in Europe, where Third Point was seeking to issue stock on the London exchange, Loeb sneered, “You will have plenty of time to discuss your ‘place in society’ with the other fellows at the club. I love the idea of a French/English unemployed guy, whose fund just blew up, telling me that I am going to fail. At Third Point, like the financial markets in general, ‘one’s place in society’ does not matter at all. We are a bunch of scrappy guys from diverse backgrounds (Jewish, Muslim, Hindu etc.) who enjoy outwitting pompous asses, like yourself.” The exchange got out after Loeb himself forwarded it to friends.
At his Jewish Enrichment Center talk, Loeb described his publicshaming technique as “using social pressure” and said it was “near and dear to my heart.” He’d recently reread some of his letters, he said, and “They’re actually quite brilliant.”
By the time he signed on the dotted line at 15CPW, the press was watching Loeb’s every move and carefully chronicled his adventures in real estate. Since 1994, Loeb had lived in his mews house on MacDougal Alley, but in April 2005, he’d bought a twelve-thousand-square-foot, forty-four-foot-wide mansion on a similarly charming, cobblestoned street in the far West Village, for $11.27 million. Before moving in, though, he bought his penthouse and put the mansion back on the market with an asking price of $18.95 million. The next year, he managed to sell it, but only got $12 million. He did better with the mews house, though again he failed to get his asking price. Listed at $7.85 million, it sold in 2009 for $5.5 million, a solid return on his investment.
Meantime, in summer 2006, he’d made the papers again when he and a number of other fund managers were sued by a Canadian insurance company that claimed they’d teamed up to destroy the value of its stock. The most colorful aspects of the conflict emerged a year later in e-mails from Loeb contained in court filings that revealed he was still an edgy, profane character. In one, he suggested that the insurance company’s CEO “bend over [because] the hedge funds have something special for you.” He also called the CEO, whose ancestry is Indian, a shwartze, a Yiddish slur for a black person.
Loeb collects postwar and contemporary paintings and photographs, some feminist and some sexually charged, by artists such as Richard Prince, Jean-Michel Basquiat, Andy Warhol, Jeff Koons, Lisa Yuskavage, Ed Ruscha, Georg Baselitz, and Cindy Sherman. His own modest artistic talent—and his pride at owning a 15CPW apartment—is displayed in the holiday cards he and Margaret have sent out to friends and associates in recent years. Their 2009 card featured the couple, their two kids, and their dog photoshopped into an image of George and Louise Jefferson from the TV sitcom The Jeffersons, accompanied by lyrics from the show’s theme song. “Well, we’re moving on up, to the West Side / To a deluxe apartment in the sky.”
The house-proud theme continues with their 2012 card, inspired by the film The Wizard of Oz. The front of the elaborate four-page card shows Daniel’s face superimposed on a munchkin and Margaret as Glinda, the Good Witch, under the headline “Somewhere over the rainbow.” Inside, their children’s faces are superimposed on the faces of Dorothy, the Tin Man, and the Scarecrow, and their dog, Biggie, appears as the Cowardly Lion. On a facing page, those characters stand on a rise, looking across a fantasy landscape toward Loeb’s own Emerald City, Fifteen Central Park West. Above them, the legend reads “Way up high . . . There’s a land . . . But there’s no place like home.” When the card is opened, it plays a snippet of the late Hawaiian singer Israel “Iz” Kamakawiwo‘ole’s ukulele version of “Somewhere Over the Rainbow.” Appropriately, the sample ends, “Dreams really do come true.”
Alas, Loeb’s first political dreams did not. A registered Democrat married to a supporter of reproductive rights, he was one of the many hedge fund managers in America who were big backers of Barack Obama, a classmate of his at Columbia University. That reflected the same generally progressive attitude toward society shown in the donations Loeb made to charitable organizations through his personal foundation. In 2000, most of his giving went to the underprivileged and medical causes, though he also gave small sums to organizations dedicated to wildlife, running, and Jewish identity. Loeb’s giving accelerated after his marriage, quadrupling to almost $2 million in 2005 and including several more Jewish and Israeli causes, among them a Hasidic group and the Jewish Enrichment Center, which got $100,000; he also gave to a pro-choice group and the cause he is most associated with, Prep for Prep, dedicated to educational diversity, which received $1 million.
Loeb’s political contributions began to attract attention in 2007. “I offered to do whatever it takes,” he told the Wall Street Journal of his call to arrange a meeting with Obama. “Obama has electrified and inspired a lot of newcomers, including myself.” But 2010 marked a turning point for Loeb, as it did for the new president. The previous year, the Obama administration had been focused on stabilizing an economy that had collapsed into the Great Recession and pushing its health-care plan, but that spring, Obama took to the bully pulpit at New York’s Cooper Union a week after the SEC sued Goldman Sachs for defrauding investors through the sale of securities tied to subprime mortgages. Those were risky loans made to unqualified home buyers, often at high interest rates, and Goldman had continued to package and sell them even as the housing markets started to collapse. In his speech, Obama pressed for financial regulatory reform, sternly lecturing the seven hundred business leaders in attendance (prominent among them, Goldman’s Blankfein) about the growing divide between Main Street and Wall Street. Loeb’s love affair with the president was ov
er.
Though Goldman had just agreed to pay the largest penalty in history for a Wall Street firm, $550 million, and reform its business practices to settle the SEC charges, Loeb sided with the bank. He’d acknowledged their ties at the Jewish Enrichment Center. “I have a good relationship with Goldman Sachs, so I’d like to keep it that way,” he’d said to knowing chuckles. Now, he called the SEC action against Goldman “politically laced” and fretted that it had damaged investor confidence already shaken in “an increasingly worrisome landscape of new laws and proposed regulations” that would “promote ‘redistribution’ rather than growth.” He was particularly incensed by a proposal (later abandoned) to tax the proceeds of the sale of hedge funds as normal income, as well as one to eliminate the carried-interest provision that allowed the managers of hedge and private equity funds to pay a low tax rate on much of their income.
Loeb’s donation-investment strategy evolved, too. In October 2010, he gave $100,000 to the Emergency Committee for Israel PAC, almost two-thirds of the funds given to the group since its founding earlier that year. ECI’s website was registered by political consultant Margaret Hoover, the great-granddaughter of President Herbert Hoover, a TV commentator and a social conservative known for her support of gay rights. But its board consists of neoconservatives and opponents of gay marriage and abortion, and initially, ECI was run out of the consulting firm of a onetime chief foreign policy adviser to failed vice-presidential candidate Sarah Palin. It “appears to be just another partisan astroturf group financed by anti-regulatory interests and advised by Republican strategists hoping to peel away Jewish support” from Obama, reporter Eli Clifton opined on ThinkProgress, a liberal blog. (Astroturfing refers to the practice of obscuring a political agenda—in this case opposition to financial-industry reform.)I
House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address Page 25
