Value Investing

HBS – Activist Investors: The Untold Story

Here’s a great article at the The HarbusThe Harbus is the independent, non-profit news organization of Harvard Business School. The article provides some great arguments against the perception that all activist investors are short term focused, aggressive, and meddlers.

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Here’s an excerpt from that article:

Ask many HBS students about the perception of activist investors as perpetuated by the required curriculum (RC), and you’ll hear the words “short-term,” “meddlers,” “aggressive,” and a number of other pejoratives that are neither politically correct nor publishable by the Harbus.  Indeed, many of the cases taught throughout the RC curriculum (across disciplines – FIN, FRC, LEAD, and LCA) characterize activists as just that.

In the Target case, Bill Ackman is portrayed as short-term and impulsive in his thinking and actions.  Then, there was the Ron Johnson (J.C. Penney) case that did the same thing.  In Kerr McGee, Carl Icahn and JANA are described as hell-bent on breaking up a company.  A recent LCA case on Sotheby’s characterized Dan Loeb as antagonistic and belligerent.

Upon closer review, there is a nuanced view of the activist landscape that is more balanced and intellectually honest, one left out of the RC curriculum entirely.  This curriculum has not only deliberately chosen cases casting activist investors in a negative light, but has also impressively managed to do so while neglecting to highlight the root causes of shareholder activism: underperforming and incompetent management teams, corporate boards that are asleep at the wheel, and passive shareholders who don’t have the time, resources, or economic incentives to hold their companies accountable for sub-optimal outcomes.


You can read the full article at The Harbus here.

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Article by Johnny Hopkins, The Acquirer's Multiple