CNBC’s Andrew Ross Sorkin speaks to Nelson Peltz, Trian Fund Management CEO, and Ken Moelis, Moelis & Co (NYSE:MC) CEO, about the strategy of investor activism and the state of play on Herbalife Ltd. (NYSE:HLF).
Delivering alpha – Ken Moelis on investor activism & Herbalife
but activism at large, the way you see it, is this good or bad from a policy perspective for society? and i ask it because you look at some of the deals and he’s made a lot of people a lot of money. jim cramer recently said if you piggyback off of your deals, you can make a lot of money. but there have been a number of other deals where people have followed the activists down the yellow road, but it has not gone to the right place. look, that’s a complicated question, because you’re allowed to have an opinion and you’re allowed to be right and you’re allowed to be wrong. so, and it’s hard for me to say. i think the word activist has gotten too much play. i think, as i said, every investor in some way thinks they have a theory of what that company can achieve and why they’re going to make money. some choose to go to the nearest megaphone and yell loudly and others choose to go to the back of the room and wait. the thing about, you said, and what nelson said about speaking quietly, is look, there’s a board of directors in every one of their companies. they talk strategy quietly, effectively. there’s a lot of complications that people think are simple from the outside. it’s amazing how little tax, you know, how people don’t understand the intricacies of tax and things like that sometimes. so, i think what nelson tries to do is become part of the corporate conversation quietly, which is how decisions get made. i mean, i have a public company, and i feel like i’m the biggest activist in moelis & company, but you know, you do it quietly and within the bounds of the corporation. right. what is the state of play on herbalife as you see it? and i ask it, and i’d also be curious about your decision to advise herbalife. you have bill ackman saying this is a pyramid scheme. how much diligence did you do before you decided you were taking on that assignment? look, i knew the company for many years. the company had gone through, it’s been in a leverage buyout with some significance institutions, owned it for many years privately, and then it went public for many years. and i know the ceo’s a personal friend. so, andrew, it’s one of those things where it’s almost, as you can tell by the two-year debate that’s gone on i’m not sure it is a smoking — you know, there’s not a due diligence item that says you’re right or you’re wrong, it’s the character of the people. i really respect the ceo. i know the people. i’ve been with them a long time. so, it wasn’t a decision. they called me up and said we have an issue. but fair or unfair for an activist to take a position as publicly as they have? it’s different than the positions that you have taken. you’ve traditionally taken long positions. yep. look, you can do anything, and it’s legal, so you can do whatever you want. now, it’s very different. it’s amazing to me that people see herbalife and the context of what nelson’s doing. it’s completely different.
Delivering alpha – Peltz and Moelis’ take on Time Warner, FOX
Nelson Peltz, Trian Fund Management CEO, and Ken Moelis, Moelis & Company CEO, discuss current M&A activity.