Remember to hate the players (like Bill Ackman and Carl Icahn) and not the game (like unlocking shareholder value). Below is the relevant activist news and stories of the day. Be warned, nothing all that exciting so far today, so there’s a lot of rambling…tip us off on Twitter, @activiststocks, or email us feedback or questions.
A Look At The Portfolio Of Billionaire Charlie Munger
Charlie Munger is one of the world's greatest investors. Over the past six decades, he's helped his business partner and friend, Warren Buffett, turn a struggling textile business called Berkshire Hathaway into one of America's largest firms. Q3 2020 hedge fund letters, conferences and more If you’re looking for value stocks, and
- H Partners revealed that it sent letter to Tempur Sealy, demanding access to the company’s records. It wants the names of shareholders in an effort to gain support for its proxy battle.
- Jana Partners has sold 20% of its fund to the private equity arm of Neuberger Berman Group, Dyal Capital. A nod for activist investing. The stake will be passive; they are just looking to ride the activist coattails.
- It has been so quiet today we’ve resorted to covering shorts. A couple of the hit piece machines are out today with some bashings. @GeoInvesting says that regulations will hurt China Finance Online [link] and @investorsbeware puts out a short piece on CorMedix, citing financial issues and lack of insider confidence [link]
- @ScottReckard at the LA Times pens a piece on how investors in a small LA bank, Orange County Business Bank, are waging their own proxy battle. This is changing how corporate governance is handled in community banks. “You used to hear from all kinds of investors that hostile takeovers — proxy battles — just weren’t done in this business.” That’s clearly changing Nate at @oddballstocks will get a kick out of this [link to LA Times piece]
- Leo Wang pens a piece for @NLegal_Global that notes that some of the major mutual funds (like Vanguard) are getting more active when it comes to corporate governance. This is a pretty big step in terms of shareholder activism and probably much needed. Leo notes, “When even passive investors appear to be embracing shareholder activism, it becomes all the more clear that shareholder activism has entered the mainstream and is here to stay.” Along those lines, here’s a tweet storm courtesy of @stockpucker… Activists wield disproportionate power because the ownership of big firms in America has polarised. On one side is the lazy money 1/n … About 20% of the typical firm is owned by index managers such BlackRock and Vanguard, which mimic the market and charge low fees 2/n … Followers of the market rather than its trendsetters, they have not in the past felt much need to worry about their investments are ran 3/n … Alongside them are the managers of mutual funds and pension funds, such as Capital Group and Fidelity 4/n … They actively pick stocks and talk to bosses but their business is running diversified portfolios 5/n … And would rather sell their shares in a struggling firm than face the hassle of fixing it 6/6
- @activistinvestr hit subscribers with an email about General Motors. Now, the GM story is well-told (if not overtold). In any case, MRL takes to task a piece by the NY Times. The NY Times article noted that GM caving to the activist demands is the start of a “troubling trend;” rather, MRL thinks, “We wonder: instead of a shakedown, did GM investors force it to think hard and critically about its cash needs? We think the latter, and can get behind that trend” [link]
- @fredwilson posts some thoughts about the Morgan Stanley Internet Conference he and @bgurley (the equity analyst turned VC) were speakers at. While on stage, they got a question about what company would be disrupted by the Internet the most. And Fred notes, “Bill answered Hertz and Avis, for obvious reasons.” Now Bill is an @Uber investor and has defended the company ad infinitum. If you ask Bill, Uber is going to take over the world, rending rental cars and auto dealerships useless. He’s even gone to bat against the renowned valuation expert and NYU Professor, @AswathDamodaran, defending Uber’s $40B plus valuation [@The_Analyst can attest to Aswath’s skills]. Okay, okay, the reason this is interesting to us is that Bill answered Hertz and Avis as the companies that will be most disrupted by tech…and if you know anything about activist investing then you know Carl Icahn and Jana Partners are both active at Hertz. Hell, it’s a hedge fund hotel if you include those that aren’t active. Marcato Capital (though it isn’t an activist position) still has a fairly large stake in Avis, and Glenview Capital and Viking Global both took 5% plus stake in December. Regardless of the fact that Hertz and Avis have some tailwinds related to the recent industry consolidation, somebody’s very wrong here [link]