Two months after cancelling an appearance to avoid tough questions from teachers' union representatives, Third Point's Dan Loeb is responding by opening his checkbook.
Loeb said this week that he would give an extra $1 million to a group of charter schools to show his opposition to the American Federation of Teachers, whose plans to question him during a panel in April led him to skip the event. The AFT has attacked Loeb for backing StudentsFirst, which it says wants to end defined-benefit pension plans for teachers, while at the same time collecting fees to manage money for those defined-benefit plans.
The AFT is also opposed to charter schools like the one, Success Academy Charter Schools, that will now get $3 million from Loeb, rather than $2 million. But his support for them is not what got Third Point onto a list of hedge funds led by those the AFT says is opposed to DB plans.
Other hedge fund managers on the "watch list" were in the audience for Loeb's speech, including Tudor Investment Corp.'s Paul Tudor Jones, Appaloosa Management's David Tepper and Elliott Management's Paul Singer. "Some of you in this room have come under attack for supporting charter-school education reform and freedom in general," Loeb said, before announcing his increased pledge to Success, which he said was designed to oppose "the leader of this attack," AFT President Randi Weingarten.
"All we tried to do is get him to answer the simple question about harmonizing his want to advise hundreds of millions of dollars of hard-working teacher pension funds while sitting on the board of StudentsFirst, which is a group that's trying to kill their retirement benefits," Weingarten told Bloomberg News. "He probably has never had anybody respectfully and nicely ask him a question that he didn't want to answer."
"Rather than intimidate me, it had the effect of redoubling my commitment and making me realize how important our work is because these kids face such obstacles," Loeb said. He added that the AFT wasn't attacking him for his support for StudentsFirst, but for his overall belief in reforming education.
Still, the AFT effort has had some notable successes. Two board members at another organization targeted by the AFT, the Manhattan Institute, are leaving. Court Square Capital Partners' Thomas McWilliams resigned last month and AQR Capital Management's Clifford Asness will not serve another term when his expires. In the interim, Asness has pledged to work to moderate Manhattan's stance on defined-benefit plans.
Kohlberg Kravis Roberts has also moved to appease the union; the private-equity giant has written to say it supports public pensions.
Both Court Square and KKR have been removed from the union's watch list, and AQR will be removed when Asness' term at the Manhattan Institute ends.
"This idea that you can take money from a fund and then have a huge conflict of interest, that's ending," Dan Pedrotty, the AFT's director of pensions and capital strategies, told Bloomberg.
Loeb scoffed at his wavering peers.
"For people who belong to the Manhattan Institute or support education reform, I think it's important to make a determination: What's more important to you, your money or your principles? For me, its my principles."