From Benjamin Graham To Buffett And Loeb, The Rise Of Activist Investing – Podcast by Stephen Grocer, The Wall Street Journal
On Tuesday’s MoneyBeat podcast, we have Jeff Gramm, a hedge-fund manager and author of a new book, “Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism,” to talk about the history of these pugnacious investors and their future.
From Benjamin Graham at Northern Pipeline, to Warren Buffett’s salad-oil scandal role to Ross Perot at General Motors, Mr. Gramm gives us the historical context and talks with us about today’s activists and shareholder engagements.
From Benjamin Graham To Buffett And Loeb, The Rise Of Activist Investing
A sharp and illuminating history of one of capitalism’s longest running tensions—the conflicts of interest among public company directors, managers, and shareholders—told through entertaining case studies and original letters from some of our most legendary and controversial investors and activists.
Recent disputes between shareholders and major corporations, including Apple and DuPont, have made headlines. But the struggle between management and those who own stock has been going on for nearly a century. Mixing never-before-published and rare, original letters from Wall Street icons—including Benjamin Graham, Warren Buffett, Ross Perot, Carl Icahn, and Daniel Loeb—with masterful scholarship and professional insight, Dear Chairman traces the rise in activist investing from the 1920s to today, and provides an invaluable and unprecedented perspective on what it means to be a public company, including how they work and who is really in control.
Jeff Gramm analyzes different eras and pivotal boardroom battles from the last century to understand the factors that have caused shareholders and management to collide. Throughout, he uses the letters to show how investors interact with directors and managers, how they think about their target companies, and how they plan to profit. Each is a fascinating example of capitalism at work told through the voices of its most colorful, influential participants.
A hedge fund manager and an adjunct professor at Columbia Business School, Gramm has spent as much time evaluating CEOs and directors as he has trying to understand and value businesses. He has seen public companies that are poorly run, and some that willfully disenfranchise their shareholders. While he pays tribute to the ingenuity of public company investors, Gramm also exposes examples of activist investing at its very worst, when hedge funds engineer stealthy land-grabs at the expense of a company’s long term prospects. Ultimately, he provides a thorough, much-needed understanding of the public company/shareholder relationship for investors, managers, and everyone concerned with the future of capitalism.
“Jeff Gramm has a refreshing approach to the generations-long conflict between entrenched corporate management and shareholder activists. Gramm illustrates this seemingly never ending struggle for corporate control by examining specific well known and surprisingly interesting examples. Dear Chairman is an engaging and worthwhile read.” (-Alan Greenspan, Former Chairman of the Board of Governors, Federal Reserve System)
“Public companies face the high standards of the marketplace: fill a need, grow, and remember always that you are the trustee of your stockholders’ money. Dear Chairman is a fascinating and colorful history. It should be required reading for anyone who wants to participate as investor or manager.” (-Charles R. Schwab, Chairman, The Charles Schwab Corporation)
“The story of the rise of activist investing has never been told as compellingly and instructively as Jeff Gramm offers it in Dear Chairman, a book that dissects the dramatic deals and brings to life the unbelievable characters of the past 100 years.” (-Arthur Levitt, Former Chairman, U.S. Securities and Exchange Commission)
“When major shareholders get actively involved, how do they think about companies and their value? Jeff Gramm breaks new ground in a book which is exciting, wise, well-written, and above all else instructive and useful.” (-Tyler Cowen, New York Times bestselling author of The Great Stagnation, professor of economics George Mason University)
“Jeff Gramm’s fascinating archaeology of shareholder activism lays bare the foundation upon which today’s turbulent, performance oriented stock market stands. Dear Chairman is an important, interesting, and insightful history.” (Frederick W. SmithChairman & CEO, FedEx Corporation)
“The letters give insight into how activist investing can both benefit and harm companies. Gramm’s findings will intrigue and inform history buffs and activist shareholders alike. ” (Publishers Weekly)