THE SHAKERS: 9 Badass Activist Investors and the Deals That Made Them Famous

The activist investor also criticized the Vonage deal, questioning Ericsson’s willingness to pay more than 50 times EV/EBIT, with EV standing for enterprise value, for Vonage when the company could repurchase ERIC stock at 8 times EBIT. Activist investors target companies that are poorly managed, inefficient, overpaying for acquisitions or suffering from a slew of other maladies that detract from shareholder value. They then push actions that they believe will benefit stockholders such as business restructurings and spinoffs, share repurchases and dividend hikes. Buffett’s investing approach has produced awe-inspiring investment returns over many years. Since 1965, Berkshire Hathaway has produced an average annual return of 20% — almost double the performance of the S&P 500 during the same period.

As he rode its recovery after bankruptcy; that represents the bulk of the fund’s 13D returns. Ackman has a reputation for arrogance, but also for being a persuasive salesman. Retail seems to be his Achilles’ heel, with investments in Borders and Target also losing out. Sheldon Adelson is an American investor, businessman, and philanthropist.

But companies usually don’t shudder when ValueAct comes along, since it has a reputation for working with management and boards. But his son-in-law Ed Garden, who is chief investment officer, has played an increasingly bigger role. Trian president Peter May is also active, with board seats at Tiffany and Wendy’s. Chamath Palihapitiya went from being a Sri Lankan refugee in Canada to a successful venture capitalist. He co-owns the Golden State Warriors basketball team and has invested in Palantir, Pure Storage, and Playdom.

A Shift From Asset Management Giants

This outperformance is likewise reflected in both against the market cap and sector indices, as shown below with the relative outperformance metrics seen for each period. Known as the «Oracle of Omaha,» he worked for and learned from Graham until the value investing pioneer retired. Buffett then proceeded to establish his own investing partnership to focus on buying stakes in quality companies at fair prices. The world’s top investors use many different investing philosophies and strategies, including value investing, growth investing, income investing, and index investing. John “Jack” Bogle founded the Vanguard Group mutual fund company in 1975 and made it into one of the world’s largest and most respected fund sponsors.

Even with this surge, KSS remains cheap, trading at just 8.2 times forward earnings – a greater than 40% discount to retail peers and nearly 55% less than its five-year average. Since going public 17 years ago, Huntsman’s shares have risen only about 50%. In addition, recent sales and EBITDA gains are mainly due to price increases; volume grew only 2% year-over-year. On the heels of the activist investor news, Unilever disclosed plans to cut 15% its regional and divisional management roles, which the company says will help to trim costs and speed up decision-making.

Defining financial, governance and technology expertise

The strategy of Engine No. 1 hinged on getting votes from Exxon’s three largest shareholders, BlackRock, Vanguard and State Street, on its side, an uphill climb since such firms often side with management. DLTR shares have risen 18% since Mantle Ridge unveiled its equity stake in mid-November and don’t look especially cheap at the moment. The stock is trading at 24 times forward earnings, which is a 32% premium to itss five-year average. In its fiscal 2021, Ericsson generated 4% year-over-year sales growth, 29% EPS gains and a 44% improvement to adjusted free cash flow. ERIC also announced plans to further increase EBIT margins by expanding its enterprise business via the acquisition of cloud communications firm Vonage, and developing a global network platform to capitalize on 5G rollouts. This is likely good news to British fund manager Terry Smith, whose Fundsmith investment vehicle is Unilever’s 13th largest stakeholder.

Becoming a successful investor is not easy, and of course luck played a role. But by learning from the techniques and strategies of the world’s greatest investors, you might be able to increase your own chances of achieving financial success. Referred to as the “Oracle of Omaha,”Warren Buffettis viewed as one of the most successful investors in history.

Many of the world’s top investors have been successful by following a long-term, disciplined approach to investing. The world’s greatest investors have been able to consistently beat the market by using a variety of strategies and philosophies. The greatest investors have all made a fortune off of their success and, in many cases, have helped millions of others achieve similar returns.

What makes for a successful investor?

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. John Bogle founded the Vanguard Group and before his death served as a vocal proponent of index investing. Buffett’s investing style of discipline, patience, and value has consistently outperformed the market for decades. Livermore began trading for himself in his early teens, and by the age of 16, he had reportedly produced gains of more than $1,000, which was big money in those days. Over the next several years, he made money betting against the so-called “bucket shops,” which didn’t handle legitimate trades—customers bet against the house on stock price movements.

Perhaps surprisingly, the answer seems to be yes, at least by some measures. Research shows that activists apparently make companies more profitable and productive, on average—not just in the next quarter but three years after the fact. And although their intervention may be followed by a decrease in R&D spending, the companies appear to become more innovative in the years following.

But when it came to picking specific stocks, he stuck to what he knew and/or could easily understand. One of the past century’s top contrarians, it is said about Sir John Templeton that he bought low during the Great Depression, sold high during the internet boom, and made more than a few good calls in between. Templeton created some of the world’s largest and most successful international investment funds. https://day-trading.info/ A special purpose acquisition company is a publicly traded company created for the purpose of acquiring or merging with an existing company. One of Corvex’s most successful activist endeavors was at Yum! Brands in 2015, where Meister gained a board seat and convinced the company to spin off its Chinese division. Corvex also successfully pushed Energen to sell itself to Diamondback Energy in 2018.

• Since 2017, the number of 13D filings has decreased each year with only 41 new activist 13D filings in 2021, compared to 48 in 2020, 61 in 2019, 65 in 2018 and 71 in 2017.
• Over the next several years, he made money betting against the so-called “bucket shops,” which didn’t handle legitimate trades—customers bet against the house on stock price movements.
• Acquisition company Acacia Research is offering $64 per share for KSS and private equity firm Sycamore Partners is reportedly willing to pay $65 – though the retailer turned down both bids in early February.
• He is credited with founding the EIM Group, for which he also serves as the chairman.
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A new firm of activists, Bluebell Capital Partners, has gone so far as to target Danone because its focus on sustainability was not matched by adequate financial returns. It helped oust the French dairy giant’s former boss, Emmanuel Faber, earlier this year. “ESG cannot be an excuse for a company to underperform,” says Giuseppe Bivona, one of Bluebell’s co-founders. Milton Friedman, the late Nobel-prizewinning economist and defender of shareholder value, to whom activists have always bent the knee, would be smiling. However, the changes aren’t always accepted by the current management, the motivation has been questionable at times, and we have even seen some hostile takeovers. Activists often call for extreme cost cutting measures, including layoffs, more streamlined management, and disposing of unprofitable units.

Carl Icahn

Ichan initiated a new stake in Bausch + Lomb ($BLCO) with 3.5 million shares. The $53 million investment in the Canadian eye health company was surprising because it only went public in May. Just weeks after the Bausch + Lomb IPO, the CEO and chairman stepped down from the board to be replaced by Icahn’s appointees.

Both years significantly exceed the $8.8 billion invested in the 61 13D filings in 2019. 2021 was a busy year for activist funds, with notable investors including Starboard Value, JANA Partners and Carl Icahn pushing for meaningful change at an array of companies. In early 2023, ValueAct Capital Management, a San Francisco-based activist hedge fund, took a stake in streaming media company Spotify Technology SA , with the goal of cutting costs and streamlining management. The SEC has proposed tougher disclosure rules for activist investors that critics contend may make activism unprofitable. The activist investor’s goals may be as modest as advising company management or as ambitious as forcing the sale of the company, divestitures or restructuring, or replacing the board of directors. Pelosi owns and operates a venture capital investment and real estate firm called Financial Leasing Services, Inc., through which he has amassed a fortune of $114 million.

It was founded only last year but has just successfully installed three directors on the board of ExxonMobil, arguing that the American oil giant is failing to prepare for a clean-energy future. It was an awe-inspiring feat (“supercool”, as one veteran gadfly put it). Hearteningly, even ESG activists themselves squabble over which of their tactics are friendlier to shareholders or the climate. According to Insightia, activist investors made public demands of 886 companies worldwide in 2021. Retail investors often track these investments because they believe in the mission and anticipate some innovation and a related increase in share price.

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The surge in activist activity

Since Jeff Ubben founded ValueAct Capital in 2000, the San Francisco-based activist fim has had representatives serve on the board of 41 companies, including Microsoft, Rolls-Royce, and Alliance Data Systems. The activist also committed to ESG investing with its Spring Fund, which held positions in Hawaiian Electric and AES Corp. In the above-mentioned study, researchers found that worker pay did not increase alongside profits and productivity at targeted companies. For a society grappling with inequality and wage stagnation, that’s deeply troubling.

The man who would one day be known as the dean of Wall Street and the father of value investing wanted it to sell those securities and distribute the profits to shareholders in the form of a dividend. Many investors don’t like to call themselves «activist» simply because becoming activist isn’t mutual exclusive of other investment styles. There are very few serial activist investors, but the ones that are have made a name for themselves. Activist investors are looking for an underperforming business that they can acquire a big stake in to force changes.

Value investing involves finding undervalued companies with strong fundamentals. Growth investing focuses on investing in companies with high growth potential. Income investing involves seeking out investments that generate a steady stream of income, such as dividend-paying stocks or bonds. Index investing involves investing in a diversified portfolio of stocks or bonds that track a market index. The firm, founded in 1995, seeks to identify situations where the activist can anticipate a catalyst that will unlock value. Third Point is a global investor, with campaigns at Campbell Soup, Sony, and Essilor Luxottica.

We wanted to highlight Cohen because he’s an example of an activist investor who participated in questionable trades and cost retail investors a lot of money. As seen with Ryan Cohen, the actions of activist investors can also hurt retail investors, particularly when they exit their position. French and UK corporate governance accepts an individual who has been a member of the audit committee as having sufficient financial experience, with competence in finance or accounting. The audit committee members should have the skills required to assess the performance of companies and external auditors as well as the ability to evaluate financial statements.

She covered shareholder activism as a reporter at Reorg and Activist Insight and her work has been published in The Washington Post, Chicago Tribune, and The Jerusalem Post. Scathing letters to management is one of the key elements of activist investing… Senior management and the board of directors, which he had private investigators dig up.