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'Loeb effect' buoys social media site for investors

Daniel Loeb, CEO, Third Point LLC, participates in the "Financial Firms: Past, Present and Future" panel at the 2010 Milken Institute Global
Daniel Loeb, CEO, Third Point LLC, participates in the "Financial Firms: Past, Present and Future" panel at the 2010 Milken Institute Global

By Svea Herbst-Bayliss and Emily Flitter

BOSTON/NEW YORK (Reuters) - In the past, billionaire investor Daniel Loeb would often wait for an industry conference before revealing his investment ideas. Not anymore.

The hedge fund manager and some other prominent investors have now turned to Harvest Exchange, a new website designed for investors, to release news of their big bets. Such announcements -- including Loeb's bet on Dow Chemicals and Kyle Bass' bet on General Motors -- often lead to big swings in share prices as other investors pile on.

Peter Hans, one of the founders of Harvest Exchange (HVST.com), said he hopes the platform can help bring into the open information and ideas that have traditionally circulated in private circles of elite investors.

It's too early to tell whether Harvest, which launched only in December, will accomplish that goal or merely end up becoming yet another platform - along with a myriad of traditional and newer business news sites - where investors can talk up their books, often anonymously.

Hans, 35, and co-founder Andrew Parmentier, 39, tapped contacts they amassed during their years on Wall Street as professional money managers and invited them to post on the website. The site's third founder is Michael Perrone, 37, a web designer who had previously managed Oprah Winfrey's Oprah.com website.

They launched their site at a time when new regulations are making it easier for once super-secretive hedge funds to say more about how they make money. The site's founders, friends of both Loeb and Bass, approached them and requested they post on it.

Bass, who manages the $2 billion hedge fund Hayman Capital Management, which gained prominence with a bet against the Japanese yen and the overheated subprime market, went public on the Harvest website with his bet on General Motors Co. Over the next week, GM's stock rose 4 percent.

Last month, Loeb published a post on Harvest about Third Point's stake in Dow Chemical Co shortly after telling his clients about it by letter. Dow Chemical's stock rose 8 percent because of the activist investor's interest, sending many investors scrambling to the website to find his presentation about the investment.

Loeb declined to comment.

Bass said in an interview that he is preparing to post on the site again soon to talk about his views on Argentina. Despite Argentina's current troubles, he sees value in the country and expects Argentine bonds to trade higher in the coming years.

"There is ownership of the ideas here, and the idea is to invite discourse by giving ideas an open airing," Bass said.

He added that the site's following will likely be so broad that it can "be a place to publicize stock ideas that appeal to people like your mother, as well as a place to discuss complicated global macro trends."

Thanks to postings by Bass and Loeb, the site has reached 10,000 members. Khai Nguyen, who runs Harvest's business development operations, called it the "Loeb effect," according to an email seen by Reuters.

Registration for the site is free, and Hans said the firm has not yet settled on a way to monetize it. As for making money from investment ideas posted on the site, Hans said:

"There are investment perspectives on Harvest that are worthy of doing more research on and acting on, and that is how I typically conduct my own investments."

In recent years, other widely followed investors such as billionaire activist Carl Icahn and PIMCO's Bill Gross have been experimenting with blogs and Twitter.

Harvest Exchange lets users publish posts in a similar format, but it is tailored for investors.

"It allows you to say more than on Twitter, but you don't have to present a full white paper," said fund manager Travis Cocke, whose $17 million Voss Capital posted its year-end investment performance letter on the site.

(Editing by Paritosh Bansal and Dan Grebler)

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