Daniel Loeb isn't one given to half-measures. The hedge-fund manager competes in triathlons, never, ever drinks from a plastic water bottle and is unsparing at times in his criticism of corporate executives.  That is exactly how his investors like him.  "I didn't give him the money to have a mellow Dan Loeb," said Hugh F. Culverhouse, a Miami investor whose family once owned the Tampa Bay Buccaneers football team. "If I want a mellow Dan Loeb, let me redeem."  'Loeb was clearly a different kind of animal. He's totally reshaped the board,' said a Yahoo investor.  Mr. Loeb, 50 years old, whose Third Point LLC oversees $8.7 billion, is coming off his biggest victory as an activist investor. His three-month drive against Yahoo Inc. culminated in the May resignations of the Web-search company's chief executive and a director—and three board seats for Third Point, including one for Mr. Loeb.  Earlier this month, Mr. Loeb and his fellow directors poached Marissa Mayer from Google Inc. to serve as Yahoo's new CEO. On Monday, Ross Levinsohn, who was passed over for the job, said he is leaving the company. But while Ms. Mayer's arrival was hailed as a coup in Silicon Valley, the stock remains in a rut.  Yahoo shares have risen 17% since September, when Third Point disclosed it had amassed a more than 5% stake. But since the start of this year, the stock is down 1%, closing Monday at $15.98, and it is off 32% over five years. The company has struggled to extract more money from advertisers, and faces growing competition from Google, Facebook Inc. and other sites.  Because of those challenges and others, it "is a very hard company for [Ms. Mayer] to turn around," said Mark Mahaney, a managing director and analyst with Citigroup Inc. who covers Internet stocks.  Third Point bought some $39.4 million in additional stock the week after Ms. Mayer was hired. With a 6% stake valued at $1.2 billion, it is Yahoo's largest shareholder, according to securities filings. Based on information available in public filings about Third Point's stock purchases, Mr. Loeb has made around $150 million in paper profits on Yahoo so far.  The Yahoo campaign signals a new phase in Mr. Loeb's career. Until now, he was perhaps best-known for his poison-pen letters, in which he has scolded executives for everything from keeping relatives on the payroll to socializing at the U.S. Open tennis tournament. Armed with a much bigger war chest—Third Point managed just $1.7 billion as of April 2009—Mr. Loeb can now aim for bigger targets.  Mr. Loeb and his investors have a lot riding on a Yahoo revival. "If he makes money on his position, it will be good," said David Tepper, a fellow hedge-fund manager who has known Mr. Loeb for years. "If he doesn't make money, what is the point?"  Other big investors have pulled back from Yahoo. David Einhorn dumped his sizable Yahoo stake last year, while Carl Icahn stepped down from the board in 2009.  "People were saying, 'Yahoo is a place where hedge-fund managers go to die,'" said Eric Jackson, a hedge-fund manager and Yahoo shareholder. "Loeb was clearly a different kind of animal. He's totally reshaped the board."  A spokesman for Mr. Einhorn declined to comment. Mr. Icahn said he believed his Yahoo effort was successful.  Mr. Loeb, who grew up skateboarding and surfing in California, caught an early glimpse of the boardroom. His father, Ronald, who died earlier this year, served as general counsel at retailer Williams-Sonoma Inc. and co-wrote a textbook on corporate governance.  His great-aunt and uncle founded toy maker Mattel Inc. When Mattel Chief Executive Jill Barad resigned in 2000, Ronald Loeb stepped in as interim CEO.  Daniel Loeb graduated from Columbia University in 1983, and was a classmate of Barack Obama. Mr. Loeb worked on Wall Street as an analyst at Lafer Equity Investors and later at Jefferies & Co. and Citicorp. Borrowing space in the weight room at Mr. Tepper's Appaloosa Management LP, Mr. Loeb started Third Point in 1995 with $3 million.  Third Point's largest fund has produced an annualized return of 17%, net of fees, since December 1996. Like many fund managers, Mr. Loeb endured a brutal 2008. His largest fund, Third Point Offshore Fund, fell 33%. So far this year, the fund is up almost 5% through July 25 after being flat in 2011, according to a person close to the firm.  Mr. Loeb regularly travels to India for yoga retreats and eschews carbohydrates and sugary beverages, friends said. He is married with three children and last year completed the New York City Marathon.  Friends and investors said his decisions are unequivocal. He doesn't drink out of plastic water bottles for environmental and health reasons, and has been active in education reform and the effort to legalize gay marriage in New York. "When Dan believes in something…he has a singular focus and is relentless in the pursuit of his objective," says Jefferies Group Inc. Chairman and CEO Richard Handler, who hired Mr. Loeb in 1991.  Even his reversals can be striking: Mr. Loeb was one of then-Senator Obama's biggest fundraisers in 2008, but in July co-hosted a $25,000-a-plate fundraiser for Mitt Romney, Mr. Obama's presumed Republican opponent this fall.  He began buying Yahoo stock at about $11 a share. He believes the shares are worth somewhere in the mid-$20s based on the value he assigns assets such as Yahoo's media and advertising businesses, and its stake in Chinese e-commerce giant Alibaba Group Holding Ltd., said people close to the firm.  Write to Juliet Chung at juliet.chung@wsj.com  A version of this article appeared July 31, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Biggest Chapter Yet For a Poison Pen.
Daniel Loeb won a big victory in his bet on Yahoo, but the sometimes caustic hedge-fund manager has not yet lifted the stock out of its rut.