Carl Icahn is still arguably one of the most famous activist investors within a select list of top activists and corporate governance zealots. Over the years, the notable billionaire investor has established a successful activist investing track record with publicly traded companies, pushing CEOs and engaging boards in an effort to increase the stock price and shareholder value of undervalued enterprises. Still, a question worth asking is how these agitators manage to exert so much influence over some of the biggest corporations in the world and whether shareholder activism is good or bad for companies?
The answer varies depending on the activist and how they choose to engage the CEO and shareholders after building an equity stake in a target company.
More than just famous activists, the following six investors focus on operational excellence that goes beyond sheer value arbitrage and capital allocation improvements, such as dividend policies and share buybacks. This overview contains information from publicly available sources, including Schedule 13D filings, proxy materials, and investor communications.
For Carl Icahn, being 80 years old is not a constraint or valid reason to slow down. His mere presence and disclosure of a new stake can still cause an upward bounce in the share price of beleaguered stocks through the so-called “Icahn Lift”. Icahn is the founder of Icahn Associates and majority shareholder of Icahn Enterprises, a diversified conglomerate holding company.
Icahn’s activist investments include Dell, Clorox (NYSE: CLX), CVR Energy (NYSE: CVI), eBay (NASDAQ: EBAY), and Apple (NASDAQ: AAPL).
Nelson Peltz was an activist investor long before the term shareholder activism was popular. And while his corporate targets have grown in size, his focus has remained the same: Cut costs and boost sales. Since co-founding Trian Fund Management in 2005, he has faced only two proxy contests to gain board representation. The first was in 2006, when Heinz opposed his proposed slate of five new directors. The second was in 2015, when DuPont (NYSE: DD) opposed his proposed slate of four new directors.
Trian’s activist investments include GE (NYSE: GE), Pentair (NYSE: PNR), PepsiCo (NYSE: PEP), Sysco (NYSE: SYY), and Mondelēz (NASDAQ: MDLZ).
Bill Ackman is one of the most famous hedge fund activists in the world. Not one to shy away from controversy, he has received a lot of negative attention due to his short position in Herbalife (NYSE: HLF) and his involvement in Valeant’s (NYSE: VRX) failed takeover bid of Allergan (NYSE: AGN). His firm, Pershing Square Capital Management, manages a highly concentrated multi-billion dollar portfolio that takes large stakes in a small number of companies, often accompanied by Ackman’s demands for corporate changes.
Pershing Square’s activist investments include Chipotle (NYSE: CMG), Restaurant Brands (NYSE: QSR), Canadian Pacific (NYSE: CP), and Wendy’s (NASDAQ: WEN).
Jeff Ubben is the CEO of ValueAct Capital Management, the San Francisco-based hedge fund that has quickly made a name for itself as a quiet instigator at the forefront of activist investing. The firm, which has targeted more than 75 companies as of 2016, invests in — and turns around — undervalued companies. In many ways, the investment style can be likened to bringing a private equity strategy to a public company.
ValueAct’s activist investments include Valeant, Morgan Stanley (NYSE: MS), Microsoft (NASDAQ: MSFT), and Adobe Systems (NASDAQ: ADBE).
Dan Loeb is the CEO of Third Point, one of the largest event-driven hedge funds in the world. As a result, his firm’s holdings incorporate both activist investing as well as merger and risk arbitrage. Loeb’s preferred strategy is to acquire shares in troubled companies, replace inefficient management, and return the companies to profitability. One of his signature tactics involves the use of florid public letters to management while engaging shareholders.
Third Point’s activist investments include Dow Chemical (NYSE: DOW), Sotheby’s (NYSE: BID), Ligand Pharmaceuticals (NASDAQ: LGND), Fanuc, and Sony.
Jeff Smith is the CEO of New York-based Starboard Value. The firm was spun off from the global alternative investment manager Ramius in 2011. While Smith is not yet as well-known as some of the more high-profile activists, his star is rising. In 2014, he succeeded in ousting the entire board of Darden Restaurants (NYSE: DRI) after a contentious campaign marked memorably by a nearly 300-page presentation that castigated the company for a host of sins, including not salting the water in which it cooked pasta and profligate breadstick distribution.
Starboard’s activist investments include Yahoo (NASDAQ: YHOO), Perrigo (NYSE: PRGO), Macy’s (NYSE: M), and Office Depot (NASDAQ: ODP).