Jeff Gramm manages a hedge fund and teaches value investing at Columbia Business School. His recently published book, Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism, has been praised as “a terrific read” by Andrew Ross Sorkin in the New York Times, “a revelation” by the Financial Times, “a grand story” by The Wall Street Journal, and “an engaging and informative book” by The New Yorker.
Five Good Questions:
- I’ve heard you previously interviewed and have been impressed with your thoughts around governance and board dynamics. How can boards help management make better strategic decisions, especially with respect to capital allocation?
- I’ve heard Munger say you could teach an entire MBA just from studying GM. Could you walk us through some of your insights, specifically during the period of Ross Perot’s involvement?
- Of all of the stories, which one was your favorite to research?
- We all see these major headlines of activists battling with management, but what percent of the work would you guess is being done behind the scenes?
- The arc of activism seems to have gone from Graham’s “would you mind releasing some of these pent up assets, please?” to Icahn’s 1980s hostile takeovers to Loeb’s poison pen and quite personal attacks. Maybe it’s softening a little from there? Where do you see the future of activism going from here?
Audio Podcast:
[drizzle]Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism by Jeff Gramm
Dear Chairman – Description
A sharp and illuminating history of one of capitalism’s longest running tensions—the conflicts of interest among public company directors, managers, and shareholders—told through entertaining case studies and original letters from some of our most legendary and controversial investors and activists.
Recent disputes between shareholders and major corporations, including Apple and DuPont, have made headlines. But the struggle between management and those who own stock has been going on for nearly a century. Mixing never-before-published and rare, original letters from Wall Street icons—including Benjamin Graham, Warren Buffett, Ross Perot, Carl Icahn, and Daniel Loeb—with masterful scholarship and professional insight, Dear Chairman traces the rise in shareholder activism from the 1920s to today, and provides an invaluable and unprecedented perspective on what it means to be a public company, including how they work and who is really in control.
Jeff Gramm analyzes different eras and pivotal boardroom battles from the last century to understand the factors that have caused shareholders and management to collide. Throughout, he uses the letters to show how investors interact with directors and managers, how they think about their target companies, and how they plan to profit. Each is a fascinating example of capitalism at work told through the voices of its most colorful, influential participants.
A hedge fund manager and an adjunct professor at Columbia Business School, Gramm has spent as much time evaluating CEOs and directors as he has trying to understand and value businesses. He has seen public companies that are poorly run, and some that willfully disenfranchise their shareholders. While he pays tribute to the ingenuity of public company investors, Gramm also exposes examples of shareholder activism at its very worst, when hedge funds engineer stealthy land-grabs at the expense of a company’s long term prospects. Ultimately, he provides a thorough, much-needed understanding of the public company/shareholder relationship for investors, managers, and everyone concerned with the future of capitalism.
Jeff Gramm's Book Recommendation:
2012 Reprint of 1961 Edition. Exact facsimile of the original edition, not reproduced with Optical Recognition Software. In this title Nizer recounts some of his significant civil and criminal cases. The tension of the courtroom and the fervor of the advocate pervaded his books, including "My Life in Court", which made him nationally famous. It rose to the top of The Times's best-seller list and logged 72 weeks as a sales leader. One critic praised it as "entertaining and philosophically instructive, an unusual combination." The book included stories of court cases that Mr. Nizer had won, including the famous libel action that the writer Quentin Reynolds, with Mr. Nizer as his lawyer, brought successfully against the columnist Westbrook Pegler. The account of that case served as the basis of the 1963 Broadway play "A Case of Libel."
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