The harder they come, the harder they’ll fall.
That Jimmy Cliff riff may become the soundtrack of the Island Records executive-cum-hedge-fund titan Dan Loeb, whose $14 billion Third Point firm has been minting money since the crash of 2008.
But the bad news for the bad boy of the hedge-fund world has been piling up this year — and it just got a whole lot worse.
First, Loeb got into a public spat with the teachers union, sullying his reputation with public employee pension investors.
Then an activist play on Japan’s Sony — which included a lecture on runaway costs — went awry. First Sony rebuffed Loeb’s advances and then Hollywood heartthrob George Clooney lashed out at the outsider, saying the investor would be the worst thing to happen to the studio.
A move against his next target — Sotheby’s — led the auction house to enact a poison pill to thwart him.
Just last week Loeb surprised investors by saying he would give back about $1.4 billion this year — this after saying he wanted to grow the fund to $40 billion.
Rivals believe the move was timed to pre-empt the blowback from an exposé of Loeb in the just-released issue of Vanity Fair. The article immediately became the talk of Wall Street.
Among other incendiary details, the article tells of a Loeb trip to Cuba in 2002 that ended bizarrely: He hit a boy while driving a car and was detained several weeks.
At least one investor could not reach Loeb while he was in Cuba, prompting him to hire a private investigator to track down the man’s whereabouts, sources said.
The VF article also reveals that the hedgie was less than honest about his connection to the more famous Loeb banking dynasty.
“Obviously an article like this [may] make an investor want to exit,” said a hedge-fund manager. “But Dan may be able to hide redemptions under the guise of sending the money back.”
Many of the article’s tales — like the poison pen letters Loeb writes to corporate boards — aren’t new. But Loeb has been trying to clean up his image in recent years to attract a new crop of institutional investors.
“Pensions do not like this stuff and a lot of people had forgotten about these bad qualities of Dan,” said someone who has known Loeb for years.
The airing of Loeb’s dirty linen could also harm his activist investing.
“Who’s going to let him on a board of directors?” asked one activist. “There’s no way that Sony or Sotheby’s will let someone like this on their board.”
But even his detractors acknowledge Loeb has an uncanny ability to make money.
“Why would a rational investor withdraw money from Third Point, which arguably is one of the best hedge funds of our time?” asks Robert Chapman of Chapman Capital. “Tell me, who has a better long-term track record than Loeb?”
Third Point is up 18 percent through Sept. 30, with an 18 percent annualized return since 1996.
Loeb did not immediately respond to a request for comment.