Describing the venerated auction house as "an old master painting in desperate need of restoration," the outspoken hedge-fund manager Daniel Loeb has called for the replacement of Sotheby's president and Chief Executive William Ruprecht in a caustic letter sent Wednesday.
The letter, which has been posted on the website of the Securities and Exchange Commission, states that Third Point LLC, the hedge fund that Loeb runs, is now the largest shareholder of Sotheby's, with control of 9.3% of outstanding shares.
Loeb cited the auction house's "chronically weak operating margins and deteriorating competitive position relative to Christie’s."
He slammed Ruprecht's leadership, saying that the CEO has failed to lead "the business forward in today’s art market. It is apparent to us from our meeting that you do not fully grasp the central importance of contemporary and modern art to the company’s growth strategy."
Sotheby's most recent earnings report failed to impress investors when announced in August. The auction house's second-quarter earnings were essentially flat compared with results from the same quarter last year.
In a news release issued Wednesday, Sotheby's called Loeb's comments "incendiary and baseless" but didn't directly address his points, saying it "will comment on the communication from Third Point at the appropriate time."
Loeb has been making waves in the entertainment industry recently, having riled Hollywood with his call for a shake-up at Sony following a number of box-office flops this year. He has called for Sony to spin off the entertainment side of its business.
His brand of aggressive shareholder activism has even provoked George Clooney, whose production company has a deal with Sony, to publicly denounce Loeb's actions.
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