Last week, Sotheby’s defended itself against the activist investor Daniel S. Loeb by questioning both his strategy and â€" perhaps just as galling to him â€" his credentials in the art world.
On Monday, Mr. Loeb sought to rebut criticisms of both.
In a 30-page document, Mr. Loeb’s Third Point hedge fund laid out its case to shareholders about why it should win three seats on the auction house’s board. It lacked some of the clever visual puns embedded in his firm’s activist campaign website, but the document sought to show that Sotheby’s has underperformed over recent years.
The PowerPoint presentation comes as the battle over Sotheby’s board heats up. The company put up its own slides last week, and both sides have now made their cases to Institutional Shareholder Services, the big investor advisory firm, according to people briefed on the matter.
A recommendation from I.S.S., whose support can often influence the outcome of a proxy fight, is expected as soon as next week.
In Third Point’s presentation, the hedge fund argued that even though Sotheby’s sold more art last year than it did at its last peak in 2007, the auction house generated less revenue and spent more money to accomplish that. Third Point also argued that Sotheby’s management has failed to produce steadily rising returns for shareholders, pointing to the stock’s swings over the past 15 years.
Over all, according to Mr. Loeb’s firm, the company’s $1.88 in earnings per share last year were down 42 percent from 2007.
Behind that lagging performance, Third Point reiterated, was a mix of poor corporate governance and management, including a failure to seize on private art sales and improving technology. The hedge fund also argued once more that the board members together owned less than 1 percent of Sotheby’s stock, a fraction of the roughly 10 percent that it controls.
Sotheby’s, the hedge fund argued, has failed to take advantage of a booming market for luxury goods to bolster its returns.
“Given the global tailwinds in the marketplace, this performance is unacceptable and we believe it can be linked back to failed leadership of the Sotheby’s board,†the hedge fund wrote.
Third Point also devoted an entire page to what it called “misleading†attacks by the auction house, including questions about Mr. Loeb’s experience in the art world. Here’s what the hedge fund wrote about its founder’s experience:
In the art/auction and luxury spaces, Mr. Loeb is a leading collector of modern and contemporary art, has been recognized by ARTNews as one of the “200 Top Collectors†each year since 2005, has had portions of his personal collection exhibited at the MoMA in New York and in other global museum retrospectives and shows, and is a trustee of the MOCA in Los Angeles.
A climax in the fight is less than a month away: Sotheby’s annual meeting is scheduled for May 6, though both the company and Third Point are in court battling over shareholder defenses that the board put in place this year.
