By Long Short Trader

Even former Microsoft Corporation (NASDAQ:MSFT) CEO Steve Ballmer noticed a change at his company when ValueAct showed up last April, saying shares were undervalued in part because investors were overlooking Microsoft’s continued success selling many of its software products to corporations.

The longtime executive credited ValueAct for helping to change investor sentiment toward Microsoft.

“Maybe starting with the ValueAct investment…there was a wave of, ‘Oh yeah those guys have a phenomenal enterprise business,’” Mr. Ballmer said in a May interview.

The other sea change at Microsoft around ValueAct’s investment was Mr. Ballmer’s surprise retirement, announced a week before ValueAct got on the board. Mr. Ballmer and other Microsoft officials said pressure from ValueAct played no role in his departure.

Source: http://blogs.wsj.com/moneybeat/2014/06/20/success-of-valueact-hedge-fund-has-dented-its-maneuverability/

As measured by market cap impact, it seems Valueact’s Microsoft activism has been the most effective. And they achieved it with minimal heads rolling, minimal/zero glitz/glamour, and minimal/zero Jersey Shore media campaigns. In short, the greatest activist victory (in recent memory), was achieved with the least bloodshed (and fanfare).

I believe it’s safe to say Valueact wants to remain low key, maintain a low profile (except to the extent that further attention will cultivate and bring about culture change in the investment world, specifically but not limited to, shareholder activism).

That being said, it would seem that it will be very difficult (for now) to maintain a low profile:

But its maneuverability appears to have been dented. For most of its history, stock prices of companies it took activist stakes in generally ticked down in the year after the firm disclosed its positions, letting it scoop up more shares for a discount  said ValueAct President and Microsoft board member Mason Morfit. In the last year, the stock prices of its picks have “popped” as other investors mimic ValueAct’s moves. All the attention is “to our chagrin,” Mr. Morfit added.

Here are some ideas:

  • Talk to management teams under assumed names (rather than Valueact’s)
  • Add some serious capital allocation to short selling (probably need to hire someone to lead the charge). This way, it’ll be easier to confuse market participants
Microsoft
Microsoft