Barbarian at the gate: hedge fund manager threatens Sotheby’s shake-up

Dan Loeb secures board seats for himself and two allies after seven-month feud with management

Arts Correspondent

He is known for “lobbing grenades” at his corporate targets until he gets his way. Now one of the most notorious hedge-fund managers in the US has won a seat on the board of Sotheby’s – and insiders at the auction house are nervous.

Dan Loeb, the founder and owner of Third Point hedge fund, has previously described Sotheby’s as an “Old Master painting in desperate need of restoration” – something he is now in a position to help push through after securing board seats for himself and two allies following a seven-month feud with management.

Art industry experts believe that one of the grandest names in the auction world now faces major changes, with management heads expected to roll, aggressive expansion, an end to pricey expenses-paid lunches and a “ratcheting up” of the war with bitter rival Christie’s.

Jeff Rabin, co-founder of advisory firm Artvest Partners, said: “I think this is very important and the next few months will be very interesting. It will ratchet up the competition with its rival Christie’s to a new level. I think we will see changes in management and significantly more aggressive behaviour from Sotheby’s in the low end of the market, in China, with [its] lending book and targeting Christie’s personnel.”

Mr Loeb, who is said to be worth $2.2bn, is a prominent “activist investor” who drew criticism from George Clooney when he bought $1bn of shares in Sony and demanded cost cuts.

He has also targeted Yahoo!, Herbalife and Apple, and bought into the Royal Mail sell-off, and often launches attacks against chief executives with his famous “letters of mass destruction”.

Dan Loeb intends to tackle Sotheby’s 'lackadaisical corporate culture' (Getty) Dan Loeb intends to tackle Sotheby’s 'lackadaisical corporate culture' (Getty)
In his letter to the board of Sotheby’s in October, Mr Loeb demanded that the auctions and the private and online sales needed to be “reinvigorated or revamped”. He also called for the chief executive, Bill Ruprecht, to step down, complained about the company’s “lackadaisical corporate culture” and bemoaned the pay packets, extravagant lunches and dinners that came at a cost to shareholders.

Josh Black, editor of Activism Monthly, said: “He went in swinging and put his cards on the table straight away. He talked at length at the company’s margins, and you would expect to see cost-cutting now. The second-biggest shareholder is an activist and they want capital to be returned to shareholders.”

One art adviser said: “I don’t think Dan wants to run Sotheby’s. He has never been someone who has bought companies and then ran them. He buys into them, he pumps the price and when he thinks it is appropriate, he sells his stock. He is a trader who goes in and out.”

Ahead of a key shareholder vote this week, the auction house agreed a compromise with Mr Loeb, allowing him three seats on the board. Both sides were playing nice yesterday. Mr Loeb insisted he was on the board to “enhance long-term value on behalf of all shareholders”, adding that he was “committed to working closely with Sotheby’s leadership team”.

But among the raft of changes he has demanded are international expansion, exploiting the brand by expanding into other businesses, targeting the lower end of the market and investing in technology.

The big question is whether Mr Loeb and Mr Ruprecht can work together. Anders Petterson, head of advisory firm ArtTactic, said: “Can they manage to put their latest spat behind them, or are they entering into a relationship that has already gone sour? If the latter, one could… end up in a situation where the management are spending more focus and time on the relationship with Loeb than the actual business and their competition with Christie’s.”

Sotheby’s, now based in New York, was founded in London in 1744, with Christie’s, now the world’s largest auctioneer, set up 22 years later.

Arts and Entertainment
Tate Modern chief Chris Dercon, who will be leaving to run a Berlin theatre company
arts
Arts and Entertainment
Tasos: 'I rarely refuse an offer to be photographed'
arts + ents
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
tv
Arts and Entertainment
Girls on the verge of a nervous breakdown: Florence Pugh and Maisie Williams star in 'The Falling'
Film
Arts and Entertainment
Legendary charm: Clive Owen and Keira Knightley in 2004’s ‘King Arthur’
FilmGuy Ritchie is the latest filmmaker to tackle the legend
Arts and Entertainment
Corporate affair: The sitcom has become a satire of corporate culture in general

TV review

Broadcasting House was preparing for a visit from Prince Charles spoiler alert
Arts and Entertainment
tvReview: There are some impressive performances by Claire Skinner and Lorraine Ashbourne in Inside No. 9, Nana's Party spoiler alert
Arts and Entertainment
Glastonbury's pyramid stage

Glastonbury Michael Eavis reveals final headline act 'most likely' British pair

Arts and Entertainment
Ewan McGregor looks set to play Lumiere in the Beauty and the Beast live action remake

Film Ewan McGregor joins star-studded Beauty and the Beast cast as Lumiere

Arts and Entertainment
Charlie feels the lack of food on The Island with Bear Grylls

TV

The Island with Bear Grylls under fire after male contestants kill and eat rare crocodile
Arts and Entertainment
Aaron Taylor-Johnson as Quicksilver and Elizabeth Olsen as Scarlet Witch, in a scene from Avengers: Age Of Ultron
filmReview: A great cast with truly spectacular special effects - but is Ultron a worthy adversaries for our superheroes? spoiler alert
Arts and Entertainment
Robin Ince performing in 2006
comedy
Arts and Entertainment
Beth (played by Jo Joyner) in BBC1's Ordinary Lies
tvReview: There’s bound to be a second series, but it needs to be braver spoiler alert
Arts and Entertainment
Paul Hollywood and Mary Berry, the presenters of The Great Comic Relief Bake Off 2015

TV
Arts and Entertainment
A still from Harold Ramis' original Groundhog Day film, released in 1993

Theatre
Arts and Entertainment
Christopher Eccleston (centre) plays an ex-policeman in this cliché-riddled thriller

TV review
Arts and Entertainment
Lena Headey looks very serious as Cersei Lannister in Game of Thrones

TV This TV review contains spoilers
Arts and Entertainment

film
Arts and Entertainment
Wiz Khalifa performs on stage during day one of the Wireless Festival at Perry Park in Birmingham

music
Arts and Entertainment
Festival-goers soak up the atmosphere at Glastonbury

music

Arts and Entertainment
Star Wars creator George Lucas

film

Arts and Entertainment

music

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence