Back in the 1970s and 1980s, “activist investors” were also called corporate raiders. Essentially, these large investors would buy up a company, strip it for parts and sell off the assets. Today, activist investors take on a new, less destructive way to achieve superior returns and hold management accountable. Carl Icahn, an activist investor, is now a household name for his outstanding track record, from Dow Chemical to Apple, by getting management to focus on shareholder value and making operations efficient. Bill Ackman and Daniel Loeb are two other very successful activist investors who have achieved very impressive returns compared to peers over the past several years. Now, it appears the “activist strategy” is being adopted by two of the largest asset managers in the world: Vanguard and BlackRock.
BlackRock and Vanguard step up voting assertiveness on companies its index funds hold
According to Kirsten Grind and Joann S. Lublin of the Wall Street Journal, Vanguard has been sending out letters to several hundred companies over the past couple of days, detailing that Vanguard “won’t sit idly by on corporate-governance issues”. Turning to BlackRock, the asset manager has made note that it will oppose re-electing board members that have overly long tenures as board members, lack of diversity on the board, spotty attendance by board members, changing corporate by-laws that negatively affect shareholders, etc.