If Denver’s Western Gas Resources was concerned about getting a letter from notoriously nasty New York investor Daniel Loeb, it should consider itself lucky.
A recent letter to Western Gas chief executive Peter Dea was a love note compared with other missives Loeb has delivered.
His literary efforts have earned Loeb, 43, a reputation as a Wall Street gunslinger with ill regard for bloated executive salaries and underperforming companies. The Columbia University graduate founded his fund, Third Point LLC, a decade ago; it has since grown to $3 billion.
In one recent letter, Loeb said his fund doesn’t have a website. But if it did, “we would likely depict a well-worn boot colliding with the backside of an incompetent manager.”
Loeb’s fund recently acquired a 5.9 percent stake in Western Gas Resources, making it the firm’s second-largest shareholder.
The disclosure, made in a federal filing last week, included Loeb’s letter to Dea, suggesting several ways Western Gas could increase its stock value.
Loeb suggested that the firm dispose of its natural-gas gathering and processing business. About 57 percent of Western’s $360 million operating profit last year came from those operations.
Western Gas also should reduce spending on gas exploration, Loeb said, and use the money for repurchasing stock or buying already-producing gas fields.
While Loeb has been known to seek the overthrow of executive teams, his letter to Dea contained this conciliatory passage:
“Please do not misconstrue our recommendations as a condemnation of management or the company’s board of directors. We have high regard for the company’s CEO and respect for the board and their prior accomplishments in their long and illustrious careers.”
His letters to other chief executives, however, have ranged from satirical to savage.
A note he sent earlier this year to Salton Inc. variously describes chief executive Leonhard Dreimann as insouciant, arrogant and bungling.
He took Star Gas Partners chief executive Irik Sevin to task for allowing Sevin’s 78-year-old mother to be appointed to the firm’s board of directors: “Should you be found derelict in the performance of your executive duties, as we believe is the case,” Loeb wrote to Sevin, “we do not believe your mom is the right person to fire you from your job.”
Loeb’s letter to Atlanta financial services firm InterCept Inc. said: “Management’s pattern of gross incompetence and dereliction of duty could expose the company to a potential tsunami of shareholder litigation.”
Third Point bought its stake in Western Gas Resources through a series of purchases over the past three months at prices from $31.03 to $38.50 a share. The stock closed Thursday at $33.60, up 38 cents, after the firm reported a 12 percent increase in quarterly earnings.
Western Gas will consider Loeb’s suggestions, spokesman Ron Wirth said. Dea declined to be interviewed.
Loeb has had two conversations with Dea. He said he came away impressed.
“He seems like an excellent manager,” Loeb said of Dea. “I feel that their management is very good and just needs a little change in direction.”
Staff writer Steve Raabe can be reached at 303-820-1948 or sraabe@denverpost.com.
