Fairfax Financial's lawsuit against hedge fund manager Daniel Loeb has just gotten uglier.
Loeb, who runs the New York based hedge fund Third Point, is being sued by the Canadian insurance company, over allegations that Loeb misled his investors over the amount of research he did before shorting their stock.
Now, as part of that lawsuit, some of Loeb's emails to another hedge fund manager, who was also short Fairfax stock, have surfaced.
And it isn't pretty.
For example: "[D]ie, Prem Die!"—in reference to Fairfax Financial's CEO, Prem Watsa.
And—either more amusing or more offensive, depending on your point of view—this: "Prem Watsa bend over the hedge funds have something special for you."
What's surprising about the content of the emails is how unsurprising it is—given the context.
Anyone who has worked on Wall Street for fifteen minutes knows that sort of taunting is par for the course.
In fact, the emails are actually on the mild side.
(There are plenty of stories that I—or anyone else who's worked on Wall Street—could share that are a thousand times worse. Bottom line: If you don't have a thick skin, the financial services field probably isn't for you.)
The problem for Loeb now is how those emails will come across to a jury.
Never mind that the shorts play a crucial role in price discovery—keeping the lunatic valuations of bubbles in check—they just aren't terribly popular with the folks.
Not even in the best of circumstances.
Not only do they make piles of money, but they're perceived as wrecking 'real' companies in the process.
Throw in a weak economy—and a few emails that someone who's never worked a day at a big bank might find offensive—and it's not a positive omen for Loeb.
In short, not a good day for Dan Loeb or Third Point LLC.
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