UPDATE 1-Loeb's Third Point calls on Sotheby's CEO to resign
Oct 2 (Reuters) - Activist investor Daniel Loeb's Third Point LLC raised its stake in Sotheby's and called for the resignation of the auctioneer's chief executive and chairman, on concerns about the company's leadership and strategic direction.
Loeb's roughly $13 billion fund, now Sotheby's largest shareholder, with a 9.3 percent stake, said it would seek to replace current CEO William Ruprecht once Loeb gains a seat on the company's board, according to a letter disclosed in a regulatory filing Wednesday.
Third Point had raised its stake in Sotheby's from the 5.7 percent it owned as of Aug. 15.
"We are troubled by the company's chronically weak operating margins and deteriorating competitive position relative to Christie's, as evidenced by each of the contemporary and modern art evening sales over the last several years," Third Point said in the letter.
"We have concluded that Sotheby's malaise is a result of a lack of leadership and strategic vision at its highest levels."
Third Point also criticized management for excessive spending and waste at the expense of shareholders, citing an "extravagant lunch and dinner at a famous 'farm-to-table' New York-area restaurant where Sotheby's senior management feasted on organic delicacies."
Third Point did not have any further comment on the letter.
Loeb also called for the positions of CEO and chairman to be separated upon the departure of Ruprecht, who holds both positions.
"While you were an able caretaker of Sotheby's during times of crisis," Loeb wrote of Ruprecht, "you have not shown the innovation or inspiration the company sorely needs to play offense today."
Last month Sotheby's said it would review its capital allocation strategy after Loeb and Nelson Peltz revealed big stakes in the company.
Loeb is one of the hedge fund industry's most famous managers, known as much for his solid returns as his acerbic and colorful letters to corporate boards. In recent times Loeb has focused his activist efforts on Yahoo Inc and Sony Corp .
Sotheby's shares were up about 0.2 percent at $49.83 in early afternoon trading on the New York Stock Exchange.