Activist shareholders do help prod underperforming management teams to maximize shareholder value. I applaud their efforts to make management teams more responsible.
So much though depends on the company they target. I personally think Motorola is a lost cause (Nokia will inevitably eat their lunch) so Icahn’s efforts there will not be very fruitful. Ditto Blockbuster. Another reader mentioned TWA and Icahn’s failure there – almost every major carrier has been in bankruptcy so it is the industry, not necessarily the activist approach that has failed. Activist investors rattled McDonalds a few years ago and they have been on a tear.
With the right company, an activist approach can work. I wish someone would take on Microsoft, the most anti-shareholder company on the planet. The Yahoo acquistion is a spectacular waste of shareholder’s money.
Most rich bully investors are concerned with only one thing – riches for themselves. In the long run, Wall Street and the rich bullies maul companies rather than improve them. W Streeters and their ilk are out for a short term profit at the expense of the long-term health of companies.
Yes – they help. Unfortunately, average people do not have the resources or time to organize and call for change. For instance, les Moonves made $65 over the last 2 years running a dying business (CBS). I am glad Icahn still has the passion to expect big things from the companies he invests in.
What they are doing wont be good for the companies because good for the companies is not their intent.
The actions of these men are clearly geared toward short term improvements in stock prices. A look at the last decade might indicate that long term health of companies, and the economy at large, are often sacrificed for those short term gains.
These guys will be able to bail out of the situation and move their money elsewhere on a whim as soon as short term gains have been pillaged. Employees and communities will not.
We need a return to companies being focused on long term profitability. It needs to be ok for a solid working company not to grow itself into destruction. It really is ok, even good, for a company to make the same solid product and make the same solid profit, year after year after year.
What am I thinking. I must be running a fever.
These are NOT activists. They are nothing more than white-collar bullies. They buy into a company and then bully them into taking a specific action that they will profit from. They then ditch their holdings. It’s a legal shakedown from guys that are nothing more than bullies. They have absolutely no care about the other shareholders, employers, or customers. All they care about is how much profit can they shake down the company for and how quickly can they do it.
I always thought Carl Icahn had gotten his come-uppance when the anticipated greenmail from the TWA venture didn’t materialize and he wound up with the company. Then he still made out by dis-membering TWA and selling off the pieces. I can’t imagine that Blockbuster itself can think about buying anything. “Good for the stockholders” ?!? The “Shareholders Champion” ?!? It seems to always work well for one stockholder – Icahn himself, i.e. a $300 million (100%) gain on Kerr-McGee in 9 months.