Third Point Presentation: The Case For Change At BID – ValueWalk Premium
Loeb Third Point

Third Point Presentation: The Case For Change At BID

The latest in the war between Dan Loeb's Third Point and Sotheby's (NYSE:BID)

Firm Overview

Third Point LLC (“Third Point”) is an SEC-registered investment adviser based in New York

  • Approximately $14.5 billion under management
  • Founder and CEO, Daniel S. Loeb, has over 28 years of experience in the financial markets

Third Point Highlights

  • Event Driven Investment Strategy

–   Focused on special situation investing across capital structures

  • Proven Track Record

– Produced average net annualized returns since inception in 1995 of 21.2% while the CS/Tremont Event Driven Index, HFRI Event Driven Index, and S&P 500 have returned 10.0%, 10.4%, and 8.9%, respectively, over the same period

  • Successful Activist Investor

– Bloomberg recently highlighted how three Third Point activist investments (Yahoo!, CF Industries, Murphy Oil) delivered returns for public shareholders that beat the S&P 500 in an article entitled, “Activist Investors are Good for the Stock Price”

– At Yahoo!, Third Point helped create approximately $15 billion of value for shareholders, as the share price increased over 85% while Third Point directors served on the board from May 2012 until July 2013

  • How did we get here?

– Third Point owns ~9.6% of Sotheby’s (the “Company” or “BID”) and believes the Company can generate significantly more value for shareholders through, among other things, an infusion of new leadership, better accountability, and increased transparency

–  Accordingly, Third Point and the Company held a number of in-person and telephonic meetings between August 2013 and

February 2014 to discuss Third Point’s ideas about how to increase long-term value for shareholders

– During these meetings, the Company offered a Board seat to Mr. Loeb; however, based on Third Point’s experience, a single nominee from an outside shareholder in a boardroom of 12 directors is not sufficient to bring about needed change

  • What is Third Point suggesting specifically?

–  Three directors to reinvigorate the Board and help Sotheby’s achieve its substantial potential

– In this case, we believe that three is the right number given the total size of the Sotheby’s Board (12 directors), the number of committees on the Board, and the specific challenges faced by the Company

– Furthermore, three directors has proven to be effective for Third Point in the past, e.g., three Third Point nominees were elected to the Yahoo! Board

  • Why should Third Point’s nominees (the “Shareholder Slate”) be elected?

– The BID nominees we oppose (Robert A. Taubman, Daniel Meyer, and Jessica M. Bibliowicz), collectively, have limited share ownership and qualifications that do not appear to add value for Sotheby’s shareholders

– The Shareholder Slate (Daniel S. Loeb, Harry J. Wilson, and Olivier Reza), collectively, owns nearly 10% of the Company and was carefully selected for its expertise in unlocking long-term value for public shareholders, enhancing operational efficiencies, and formulating strategy at luxury companies

  • In fact, Third Point nominees have already delivered benefits to Sotheby’s shareholders…


Our business case is a simple one

  • Management’s claim that 2013 was a “record” year is misleading and demonstrates the risk of having a Board asleep at the switch
  • While, relative to the Company’s prior peak in 2007, the Company sold a greater dollar value of art, the more meaningful metric is that the Company generated less revenue and spent more money to do so
  • The bottom line is that earnings per share were down 42% versus their prior peak
  • Given the global tailwinds in the marketplace, this performance is unacceptable and we believe it can be linked back to failed leadership of the Sotheby’s Board

We strongly believe the Shareholder Slate can reinvigorate the Board and help Sotheby’s achieve its substantial potential

Full presentation



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