Carl Icahn and Bill Ackman, two of the most prominent activist investors, don’t believe their methods are harmful to the U.S. like other activists are. Both Charlie Munger and Warren Buffett said at Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s annual meeting that activist funds will attract more money. However, Munger doesn’t think activists actual improve the situations of the companies they target.
Ackman, Icahn take offense
Bloomberg reports that both Ackman and Icahn said they don’t want to be lumped in with the type of activist investing Munger and Buffett spoke badly about. Ackman said he agrees with Buffett and Munger that most activist investors are bad for the U.S. He said looking for short-term gains without improving business is bad for both shareholders and businesses. He also believes that short-term activist campaigns are bad for U.S. companies.
On April 9th 2021, Bruce Greenwald, the founding director of the Heilbrunn Center for Graham and Dodd Investing at Columbia Business School, sat down for a Fireside Chat with Li Lu, the founder and chairman of Himalaya Capital as part of the 13th Columbia China Business Conference. Q1 2021 hedge fund letters, conferences and more Read More
According to Ackman, his firm Pershing Square Capital Management holds its stakes four or more years. He named Canadian Pacific Railway Limited (USA) (NYSE:CP) and General Growth Properties Inc (NYSE:GGP) as two examples. He noted that shareholder value rose in both of those two companies. He also said almost all of the companies he has invested in had an increased market value by the time he sold his stake.
Icahn said he understands and “somewhat” agrees with Munger’s criticism of activist investor. However, he also believes it “doesn’t mean you throw the baby out with the bath water.” He believes it’s important to hold companies accountable.
Icahn wants Buffett to be more like him
Carl Icahn actually wrote an article published in Barron’s in which he said Warren Buffett take on an activist roles in some situations. Specifically, he named the fight over the compensation package at The Coca-Cola Company (NYSE:KO), which Buffett has expressed his disagreement with. He also said that if Buffett, known as the Oracle of Omaha for his seemingly prophetic bets on companies, continues to draw thousands of people to his annual meeting, he should speak out for changes.
Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is The Coca-Cola Company (NYSE:KO)’s largest shareholder. Buffett abstained from voting against the company’s compensation proposal at its annual meeting last month. Then he criticized it after the plan passed. He said he had privately discussed the issue with Coke CEO Muhtar Kent rather than publicly rebuking the company.
Buffett did say at Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s annual meeting though that there are “certain cases” in which companies should change their corporate manager.