Third Point CEO Dan Loeb: I wouldn't underestimate the resilience of the American economy

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Welcome back to Squawk Box. At a luncheon hosted by the Economic Club of New York yesterday, I spoke with legendary activist investor Dan Loeb. In an hour-long conversation, he had some fascinating comments. He, of course, is the CEO and CIO of Third Point, the hedge fund that he started 30 years ago in 1995, now managing $11.7 billion in assets under management. On stage, he weighed in on just about everything, including today's market environment and how the sentiment on Wall Street has switched from a sense of optimism at the start of President Trump's term to a feeling of uncertainty in this moment and its potential lasting impact. Here's what he said. He said, 'I would not underestimate the resilience of the American economy. I think there will be residual concern about some of what he described as the capriciousness with which some of these issues have been dealt with, and confidence in the rule of law.' So he made some pretty interesting comments there, expectations being met, calling effectively the administration capricious in terms of how they've gone about all of this. He also weighed in on the changes to Delaware law. This is interesting given that he's an activist shareholder, and clearly shareholder rights are interesting to him. He said, 'There's been an enormous overreach by the Delaware judges over whoever adjudicates these things, determining what is fair or not fair for CEO compensation. That's obviously something he's gone after over all these years. That is out of bounds. I think it is for shareholders to determine. I think it is understandable that public companies would go to a venue that doesn't overstep what should be their duties around securities and corporate law.' Third Point is incorporated, we should mention, in Delaware. The hedge fund has been a beneficiary of the run-up among the Mag 7 stocks with big bets on Meta and Amazon, though interestingly, Loeb says in the last few months he shifted away from these investments, exiting his position in Meta and reducing his investment in Amazon. Loeb says he's leaning further into credit, an area he sees as an important piece now for the future of Third Point. It's about 50%, almost 50% of the business right now. And he says there's a lot better risk reward. He equates his equity business longer term to what he thinks is going to start to look like Marc Rowan's PE business at Apollo. He says it will always be part of Third Point's DNA, but he sees massive opportunities in private credit. Of course, Apollo is now effectively a credit operation with a sort of bolted-on private equity firm. So I think when you think about Third Point in the future, you could see something that looks a lot more like a credit operation with a little bit of activist equity.

Was he wholly talking about Elon Musk's compensation?

Are there? We talked. It was in reference to Elon.

That's what I mean. Can you name? Are there, I don't know, are there other examples where the Delaware courts have done what I thought was just that was outrageous and for us, but as it happened with other CEO compensation? Have they?

No, but there's been other suits that people have felt.

But not on CEO.

Comments on CEO compensation.

He's talking solely about myself. I was surprised only because, you know, he has effectively attacked companies, typically Delaware companies, over comp and all sorts of other things quite successfully. And by the way, the Delaware court has been an ally of a lot of the activist investors in America in terms of giving them leverage over boards. And so to think that he's actually in favor of companies going, for example, to Texas, where, by the way, activist shareholders are not going to have any real leverage.

But I mean, that was a case where the shareholders, at least in the case of Tesla, were really on Elon's side on that.

Right. But I think that Dan's comment was actually, I mean, we were talking about broader.

But he was asking whether you have other instances where there was.

I actually don't know of other instances, but I do think that he has a relatively negative view or dim view, I should say, given what Delaware.

Musk, you know, and many times he said, you know, we're supposed to be at by Jupiter in Jupiter on Jupiter by now with like a town with a lot of the promises he's made. But when he made that promise to get that compensation, we all said there's no way.

No way to make it right.

And he totally did. So if you're able to do that and the shareholders benefit as well, I think that's.

And by the way, when they went back and asked the shareholders, the shareholders voted again.

Exactly right. So what are they doing in Delaware?

I don't know. I mean, you know, my, I'm with you on that. I was there from the beginning. I think you've switched your view to be.

No, I always know.

What are you talking about? You don't think I thought he deserved it?

In the beginning, you thought that he shouldn't get the money. Remember?

We thought it was a crazy deal. But we also, I also never thought that.

I thought a crazy amount of money. But I never thought he'd ever hit the metrics.

I've never seen. If you can get, if you can do it, flaunt it. We're going to have a guy on who I think.