Academic

Today our class discussed individual shareholder activists.  While some investors with more social agendas get swept into the group, most lists of today's "notable" activists include those focused on corporate performance and value such as people like William Ackman, Richard Breeden, Warren Buffett, Christopher Hohn, Carl Icahn, Daniel Loeb, Nelson Peltz, and T.Boone Pickens.  Of course most of these individuals engage in activism through an entity?generally a hedge fund?but have nevertheless created a name for themselves as activists.  It is an intriguing list with some interesting common threads. 

One of the first things I noticed related to age.  Indeed, today's activist investors are often characterized as ?new? shareholder activists.  But while there certainly is a cohort of younger activists such as Daniel Loeb and Christopher Hohn on the list, others like Icahn and Pickens are older.  Which of course begs the question about whether today?s activism can really be deemed ?new,? or if we merely are witnessing the old dressed up to appear new.  And an interesting side point: it could be that the age issue is a plus, perhaps suggesting that even if some activist investors hold stock in particular companies for relatively shorter periods, given their age, they really should be viewed as long term investors in the market. 

A second observation is that the activist group includes a small number of so-called ?corporate raiders? turned shareholder activists. So is this new activism just a kindler gentler version of such ?raids?? 

Third, these investors have lots of money, which cuts in a number of different ways.  As an initial matter, it is worth noting that whether you are talking about Warren Buffett?s donation to the Gates Foundation or Christopher Hohn?s focus on children?s charities, these investors all seem to have very strong commitments to charitable causes.  So while they make a lot, they also give a lot. 

With respect to how the money issue relates to activism, the billionaire status of these activists suggest that shareholder activism pays, though not as much as before the downturn.  That status also appears to confirm the high costs associated with successful activism.  To be sure, such a confirmation, in turn, highlights the cost barriers related to activism, but doesn?t answer the more pressing question: Will efforts to remove those cost barriers only help those seemingly already willing and able to take on the costs, or will the removal ?level the playing field? by creating space for investors for whom costs represents a significant hurdle?