A Noted Poison Pen Starts a Hedge Fund Hiring Showdown
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Daniel S. Loeb, a hedge fund manager who has become as famous for his poison pen as for his investment performance, is at it again.
E-mail messages from Mr. Loeb have in the past been the talk of Wall Street. Mr. Loeb, who runs Third Point, which has $3.6 billion under management, makes sure to widely distribute copies of his messages, no matter how personal or pointed the subject. Often his targets are chief executives of companies he thinks are mismanaged.
Daniel S. Loeb, the hedge fund manager at Third Point, has become famous for scathing letters and e-mail messages.
In his latest missive, Mr. Loeb is taking on one of his biggest and most successful rivals in the hedge fund business.
Last week, he sent an e-mail message to Kenneth C. Griffin, chief executive of the Citadel Investment Group, saying that he was furious that Mr. Griffin had recently hired an employee away from a third hedge fund, Greenlight Capital.
"You are surrounded by sycophants but even you must know that the people who work for you despise and resent you," Mr. Loeb wrote to Mr. Griffin in an e-mail message he also distributed to others in the industry.
"Let me be clear that under no circumstances are you to approach any Third Point employees or attempt to offer them jobs," he added.
That warning, Mr. Loeb said, applied to any hires Citadel might make from other hedge fund managers Mr. Loeb knows.
"Should you attempt to hire people from them I will consider it a similar act of war. My friends' enemies become my enemies," he wrote.
A spokeswoman for Citadel declined to comment, as did a spokeswoman for Third Point.
Mr. Loeb did not reply to an e-mail message seeking comment.
David Einhorn, manager of Greenlight, extended best wishes to the employee who joined Citadel, Andrew Rechtschaffen. He declined to comment further.
Reaction from hedge fund investors was mixed.
E-mail messages from Mr. Loeb have in the past been the talk of Wall Street. Mr. Loeb, who runs Third Point, which has $3.6 billion under management, makes sure to widely distribute copies of his messages, no matter how personal or pointed the subject. Often his targets are chief executives of companies he thinks are mismanaged.
Daniel S. Loeb, the hedge fund manager at Third Point, has become famous for scathing letters and e-mail messages.
In his latest missive, Mr. Loeb is taking on one of his biggest and most successful rivals in the hedge fund business.
Last week, he sent an e-mail message to Kenneth C. Griffin, chief executive of the Citadel Investment Group, saying that he was furious that Mr. Griffin had recently hired an employee away from a third hedge fund, Greenlight Capital.
"You are surrounded by sycophants but even you must know that the people who work for you despise and resent you," Mr. Loeb wrote to Mr. Griffin in an e-mail message he also distributed to others in the industry.
"Let me be clear that under no circumstances are you to approach any Third Point employees or attempt to offer them jobs," he added.
That warning, Mr. Loeb said, applied to any hires Citadel might make from other hedge fund managers Mr. Loeb knows.
"Should you attempt to hire people from them I will consider it a similar act of war. My friends' enemies become my enemies," he wrote.
A spokeswoman for Citadel declined to comment, as did a spokeswoman for Third Point.
Mr. Loeb did not reply to an e-mail message seeking comment.
David Einhorn, manager of Greenlight, extended best wishes to the employee who joined Citadel, Andrew Rechtschaffen. He declined to comment further.
Reaction from hedge fund investors was mixed.
"Public brawling - however entertaining - merely confirms the collective wisdom of the great unwashed that hedge funds are a bunch of irresponsible cowboys," wrote Greg Newton, who writes a widely read blog on hedge funds and related topics called Naked Shorts.
Some fund managers said that Mr. Loeb's e-mail message reflected that the pace of hedge fund start-ups had reached such a frenzy that even the largest funds were having trouble retaining employees.
"The market for talent is unbelievably competitive," said Robert L. Chapman Jr., who has been in the midst of recruiting several executives for his hedge fund. A Web site for Mr. Chapman's fund extols the lifestyle benefits of living in the Los Angeles area, where his offices are located.
Mr. Griffin's firm, Citadel, employs more than a thousand people - large for a hedge fund. And he can afford to pay more than many of his competitors because of the unusual way Citadel bills investors for its services.
Citadel does not charge a fixed fee of 1 percent or 2 percent of assets for expenses, as most hedge funds do. Instead, Mr. Griffin bills investors annually for whatever it cost to run the fund that year, a figure that fluctuates, but has been as high as 6 percent of assets, according to investors.
This is not the first time Mr. Loeb has conducted a heated - and personal - exchange in public. Earlier this year Mr. Loeb had a widely circulated e-mail message exchange with a potential hire.
The exchange ended with Mr. Loeb telling the trader, "I love the idea of a French/English unemployed guy, whose fund just blew up, telling me that I am going to fail."
While some hedge fund investors rolled their eyes at Mr. Loeb's latest antics, they noted that, at least in one respect, Mr. Loeb had already gotten the better of Mr. Griffin.
Third Point's largest fund has returned more than 19 percent through August. A person briefed on Citadel's results said the firm's flagship was up 2 percent through August.
Investors in hedge funds said that they were willing to put up with a lot of eccentricities if the manager was a money maker.
"This stuff is totally tangential," one hedge fund investor said, referring to Mr. Loeb's letters.
Some fund managers said that Mr. Loeb's e-mail message reflected that the pace of hedge fund start-ups had reached such a frenzy that even the largest funds were having trouble retaining employees.
"The market for talent is unbelievably competitive," said Robert L. Chapman Jr., who has been in the midst of recruiting several executives for his hedge fund. A Web site for Mr. Chapman's fund extols the lifestyle benefits of living in the Los Angeles area, where his offices are located.
Mr. Griffin's firm, Citadel, employs more than a thousand people - large for a hedge fund. And he can afford to pay more than many of his competitors because of the unusual way Citadel bills investors for its services.
Citadel does not charge a fixed fee of 1 percent or 2 percent of assets for expenses, as most hedge funds do. Instead, Mr. Griffin bills investors annually for whatever it cost to run the fund that year, a figure that fluctuates, but has been as high as 6 percent of assets, according to investors.
This is not the first time Mr. Loeb has conducted a heated - and personal - exchange in public. Earlier this year Mr. Loeb had a widely circulated e-mail message exchange with a potential hire.
The exchange ended with Mr. Loeb telling the trader, "I love the idea of a French/English unemployed guy, whose fund just blew up, telling me that I am going to fail."
While some hedge fund investors rolled their eyes at Mr. Loeb's latest antics, they noted that, at least in one respect, Mr. Loeb had already gotten the better of Mr. Griffin.
Third Point's largest fund has returned more than 19 percent through August. A person briefed on Citadel's results said the firm's flagship was up 2 percent through August.
Investors in hedge funds said that they were willing to put up with a lot of eccentricities if the manager was a money maker.
"This stuff is totally tangential," one hedge fund investor said, referring to Mr. Loeb's letters.
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