Communiqués

Dan Loeb Unsure Sony Heard Him The First Time

It’s remains unclear to the hedge fund why it must offer itself up for a seat on the board more than once but the universe works in mysterious ways. So Third Point is just going to put it out there again, if Mr. Hirai likes it, he can take it, if he doesn’t, send it right back: “We reiterate our offer to serve on Sony’s Board of Directors…Although we have not yet been asked to discuss our ideas with the Company’s investment bankers or Board, we would like to do so promptly. We hope that after seriously considering the merits of our proposal, Sony’s Board will share the enthusiasm that other shareholders have resoundingly expressed for it.” Read more »

Bill Ackman: Where We’re Going, We Don’t Need Roads

The principal weakness we share with most other money managers is the fact that our capital base is not permanent, and we therefore keep cash on hand and/or own passive liquid investments which we can sell to meet potential investor demands for capital. To address this weakness in our open end hedge fund structure, later this year, we intend to launch the private phase of Pershing Square Holdings, Ltd., which we expect to eventually list on the London Stock Exchange…In [the cases of Canadian Pacific, JC Penney, Justice Holdings and General Growth], we had the resources to effectuate the necessary change and the capital commitment from investors who were willing to wait for the changes to be implemented. During the course of each investment, however, there have been periods of enormous skepticism both from the investing public at large and, presumably, from some of you who are invested in the Funds…The Pershing Square funds have been a large beneficiary of our ability to take advantage of periodic market skepticism by increasing our ownership at more favorable prices. Volatility is the friend of the unleveraged long-term investor. We much prefer the bumpy road to higher rates of return than a smoother ride to more modest profits. Read more »

We struggle with how bad of a grade to give ourselves for 2011 because in some ways it’s too early to tell. Yes, many of our stocks took beatings during the year, but only time will tell whether we were wrong or just early. We think in most cases the latter, given that we still own meaningful positions in 8 of our 10 (and 15 of our 20) biggest losers on the longside in 2011. If even a handful of these stocks perform like we think they will in the next 1-3 years, we won’t look as dumb as we do today– and thus we might give ourselves a C for 2011. If these stocks don’t recover then we deserve a D. Why not an F? Because an F is reserved for blowing up- and we didn’t…We feel badly about our recent performance and obviously wish we’d done many things differently, but we are not at all discouraged, as we’ve been through this before. If you look at our performance table at the beginning of this letter, you will see that we’ve lost more money, much faster, on two other occasions: we were down 27.4% in eight months from June 2002 – January 2003, and down 32.8% in five months from October 2008 – February 2009. In both of these cases, by playing a strong hand and buying more of our favorite stocks as they plunged, we made back all of the losses (and then some) remarkably quickly: in only nine months in 2002-03 and a mere seven months in 2008-09. We could not be more confident that we will rebound strongly from our latest losses [-24.9 percent for 2011] as well. Read more »

Dan Loeb Counsels Yahoo To Do The Right Thing

December 13, 2011

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Mr. Roy Bostock, Chairman

Dear Directors:
Third Point LLC, as the beneficial owner of 5.2% of Yahoo! Inc.’s (“Yahoo”) outstanding shares, remains extremely troubled by news reports regarding the dysfunction and inequity being exhibited in the process of maximizing stockholder value that the Board is allegedly “managing”. We are disturbed but not surprised by this mismanagement given the history of strategic bungling by Yahoo Board Chairman Roy Bostock and Founder Jerry Yang, which has been chronicled in our previous letters and in numerous critical media and analyst reports. As significant shareholders with our own fiduciary duties to investors to uphold, we cannot stand by silently if such reports are accurate and Yahoo, a company in no need of cash, plans to engage in a sweetheart PIPE deal which will serve only to entrench Mr. Yang and the current board while massively disenfranchising public shareholders and permanently robbing us of the opportunity to obtain a control premium.

Read more »

John Paulson Is Sorry

Hedge fund legend John Paulson apologized to investors for what he is calling a year that has been “the worst in the firm’s 17 year history.” “We are disappointed and apologize,” the Paulson Funds said in a letter to investors obtained by CNBC. Hedge fund legend John Paulson apologized to investors for what he is calling a year that has been “the worst in the firm’s 17 year history.” “For 17 years, we have been generally correct in these macro assessments. This year we were clearly wrong in our judgment regarding the potential for the negative conditions mentioned above to create a toxic mix of fear in the markets,” the report says. The hedge fund company is now “wholly focused” on returning investors to their high-water marks. The report says Paulson is confident that “many of our position will recover as fear subsides.” [NetNet]

Sure, Bill could let himself get upset about how things are panning out this year but he’s not. And if anyone should be freaking out about the way things are going, you’d better believe it’s him. He’s got mucho personal dinero tied up in this thing and if it goes down big time, it’s gonna be good-bye weekly Target shopping sprees, hello can I fill out a job JCPenney job application. And yet here he is, no freak outs, no panicking, no how am I going to get myself out of this. Everything is fine, there is nothing to worry about. If you were invested with a manager like, for instance, John Paulson, then you could worry. Then it’d be totally understandable to consider yourself fucked- big time. Luckily for you, though, you’re with Pershing and at Pershing, we focus on the big picture. Rome wasn’t built in a day and places like Family Dollar aren’t going to become premier shopping destinations without a little patience. So: Do. Not. Worry. About. Your. Money. All is good. Take a deep breath, calm down, and dry those eyes. We’re all in this together and if Bill’s not crying, you shouldn’t be either. Read more »

In related news, cat got your tongue? Read more »