Pershing Square Capital Management’s Bill Ackman and distinguished lawyer Martin Lipton (who has spent much of his career defending boards from activists like Ackman) traded thinly veiled barbs at Grant’s  fall conference on October 21st, presenting the best and the worst of what activism can accomplish in a pair of talks, according to Grant’s Interest Rate Observer, a copy of which was reviewed by ValueWalk.

At Grant's Conference, Ackman, Lipton Spar Over Activism

Lipton calls out rough tactics without naming names

Lipton started off the exchange with his speech titled “Activist Interventions and the Destruction of Long-Term Value,” arguing that corporate boards should consider a wider array of constituents when making decisions including employees, communities, and customers, but rough activist tactics put companies in the unenviable position of either acceding to their demands or defending themselves in ways that can hamper future growth.

Lipton also rattled off a litany of offenses that, even without naming specific hedge fund managers, will be entirely familiar to most readers: publishing nasty, open letters attacking management so that the market (and other hedge funds) know that an attack is underway; ruining an entire nation’s credit standing and harming its economy to boost profits on distressed debt bought at the bottom (he even snuck in a ‘vulture’ reference); and shorting a company to the tune of $1 billion while lobbying for government action against it.

Ackman responds, says Lipton underestimates need for corporate agitation

Ackman was apparently smiling during Lipton’s speech, likely because he knew that he would get to go up shortly after and defend his record. Ackman brought up one of his fund’s big successes, turning around Canadian Pacific Railway Limited (TSE:CP) (NYSE:CP) as an example of when activism becomes necessary.

“We say down as Marty would have liked us to, very quietly with the chairman of the board and said, ‘Look, we have the best [railroad] CEO in North America, you have the worst. If we switch the two, a lot of value can be created’,” said Ackman. “Marty would have recommended that we quietly go away.”

When the board turned him down, he started an activist campaign that garnered a 90% vote and Ackman’s pick became CEO anyways along with eight out of fourteen board seats, and the value of the company has increased nearly five-fold in the two years since then.

Aside from highlighting a few other successes that wouldn’t have been possible without an activist approach, Ackman also pointed out that even after activism’s noticeable rise in recent years it’s still a pretty small part of the market. There may have been 250 activist campaigns so far this year, but that’s out of more than 20,000 publicly traded companies around the globe.

Also make sure to check out Bill Ackman’s Big Pharma Trade Is Making Wall Street A Very Awkward Place by Linette Lopez of Business Insider.