Dan Loeb: The Lost Art of Short Selling, and Why Stock Picking is Back
In a Nutshell
Dan Loeb argues that short selling and disciplined stock picking have returned as essential skills in a market dominated by bond and credit selection. Third Point has evolved from pure event-driven trades toward evaluating durable moats, adaptable management, and tech-driven disruption while running a multistrat platform that spans long/short equity, structured credit, private lending, and insurance. Loeb highlights outsized opportunities on the short side—especially structurally flawed sectors like homebuilding—and stresses that human judgment, pattern recognition, and selective activism remain irreplaceable even as AI grows.
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Dan Loeb states that the lost art of short selling has come back and is absolutely critical. He emphasizes that you have to be really selective regardless of what you do. He notes that people talk about a stock pickers market but clarifies this is a bond and credit pickers market.
Loeb mentions that when Third Point was small, their main tool was shame and humor. He references turning up the heat on Nestle. The shift has really been more towards a dare to be great message. He states that activism without proxy contest is like Catholicism without hell.
Loeb discusses his evolution as a public persona before Twitter. He was active in very different places, including Wall Street Bets before Wall Street Bets existed. He explains that there was a brand new technology called the internet, and shortly thereafter, long before Reddit or any of these other things, there were a series of chat boards including Yahoo and Silicon Investor. People would congregate and kibbitz, mostly anonymously. It was an interesting place to exchange ideas and was really the wild west where people could pretty much say or do anything, though there was a lot of substance there too.
When asked if he engaged in any trolling per se, Loeb confirms he did. He states that some people use the term OG and sometimes he says he was the OT, meaning the original troll. He explains it was fun and he did not know he was one day going to run institutional money and have a big fund. He was just having fun and blowing off steam. Investing is fun and particularly on the short side there is so much humor in it when you detect these companies, especially in the 90s. It was really unsupervised and there were some incredibly fraudulent companies out there. It was just fun to uncover them and kind of taunt the management teams and ultimately prevail.
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