NYU Stern is pleased to present the fifth issue of eVALUATION, Stern’s student-run investment newsletter. For this issue we elected to focus on the increasingly popular and often contentious investment strategy: Activist Investing.
Inside you will find detailed insights from industry experts who have made careers out of working closely with incumbent management of portfolio companies to enhance shareholder value – including Claar Advisors Managing Member and JANA Partners Co-Founder, Gary Claar, Bulldog Investors’ Head of Trading, Rajeev Das and Dalton Investments’ Co-Founder, James Rosenwald. We also have a special section featuring NYU’s very own Valuation expert, Professor Aswath Damodaran. In addition, the newsletter features student investment write ups, including long Ubiquiti Networks (UBNT), long Medy-Tox (KOSDAQ:086900), and long Dish Network (DISH).
The rise in popularity of ‘activist investing’ has led many commentators to herald this as the ‘golden age’ of activist shareholders. The concept of shareholder activism often inspires the image of fiery eyed hedge fund managers writing artsy letters demanding corporate change. However, long before ‘activist investing’ became a buzzword, successful ‘active shareholders’ have been working with incumbent management to enhance shareholder value for many decades – often under the radar.
Therefore, we at eVALUATION apply a much broader definition to the term. Today we are in an era where ‘activist tweets’ drive share prices. Globally, 344 companies were subject to shareholder activism in 2014, compared to 291 in 20131 (the actual number is much higher as a number of ‘campaigns’ are not publicly disclosed by ‘active shareholders’). Shareholder activism is prevalent not only across all asset classes but also across investor classes. To raise their voice and effect change, many institutional investors as well as individual/minority investors, are increasingly taking a more ‘active shareholder’ role through proxy contests and focused public forums, respectively.
It is our pleasure to introduce this fifth issue of eVALUATION, where we elected to focus on this broader definition of shareholder activism. In our view, the dynamic relationship between shareholders and management is a source of value creation and is therefore worthy of deeper investigation. We hope to give readers detailed insight into the mind-set of some of the most experienced and successful long-term active shareholders. These success stories often do not receive the publicity of widely covered activist campaigns; however, they carry poignant fundamental investing lessons. We hope that you enjoying reading our interviews with leading ‘active shareholders’ as well as some of our best student investment write-ups. Finally, we would like to thank all our interviewees for their invaluable time and contribution.