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Should you hook up with the activists? Not out at Occupy Wall Street, but to ride along with...

Should you hook up with the activists? Not out at Occupy Wall Street, but to ride along with activist investors like Carl Icahn and Nelson Peltz. There are payoffs to be had, but also great risks: If you followed Icahn into Yahoo (YHOO) when he pushed to merge it with Microsoft (MSFT), you'd be down 41% today.
Comments (6)
  • tjohn1
    , contributor
    Comments (152) | Send Message
     
    Carl and Nelson were already wealthy when they started all these activist shenanigans to get more wealthy. If you are wealthy, you can imitate them with the same or different results. In my view Carl and Nelson are not saviors of our capitalist system. They are not even saviors of their own stinking souls. This is what all those Occupy Wall Street souls are pointing at. Greed, unfettered greed- That is what is destroying this country!
    22 Oct 2011, 08:16 AM Reply Like
  • User 509088
    , contributor
    Comments (1102) | Send Message
     
    i fell asleep with the tv on and glee must've been on cuz i dreamed of icahn as frank'n'furter from rocky horror, with naive yahoo as brad and janet, and obviously ibm's creation, msft, as rocky.

     

    gotta use the sleep timer.
    22 Oct 2011, 09:40 AM Reply Like
  • spald_fr
    , contributor
    Comments (2734) | Send Message
     
    [There are payoffs to be had, but also great risks: If you followed Icahn into Yahoo (YHOO) when he pushed to merge it with Microsoft (MSFT), you'd be down 41% today. ]

     

    Icahn was right. It was ex-CEO "Blowhard" Bartz that got it wrong.
    22 Oct 2011, 10:37 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3342) | Send Message
     
    Shareholder power? The new socialism. Worker/investor controlled companies.
    22 Oct 2011, 11:01 AM Reply Like
  • Clayton Rulli
    , contributor
    Comments (2656) | Send Message
     
    It must be easy being Icahn. Firts, you buy 5% of a company, then announce some insane bid 10-30% above the market price, or even make some other bold announcement about how its undervalued, and you instantly make 10-30%.

     

    No wonder he is rich.
    22 Oct 2011, 02:12 PM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1899) | Send Message
     
    Icahn activism if far different than Peltz activism. One is better off following Peltz activism where operational improvements are pursued and more sustainable long term value created.

     

    Furthermore, if there is a substantial bump on the announcement of an Icahn or Peltz position, then some/all of the favorable risk/reward benefit of following those activists may already be priced in the stock. Better to do research on the idea and, if there is a fallback in price due to general market weakness, then consider a position.

     

    Finally consider less well known activists where there is not a price bump just on the mere announcement of a filing. From my experience, I find activism in small- and micro- cap companies can drive much more meaningful improvements in operating performance, multiplied by improved investor perceptions, as reflected through expanded valuation multiples, to create enormous returns well in excess of large cap activism. How much was Icahn ever going to create in Time Warner - 40-80%? Look what Lawndale did with Quality Systems (QSII) in 1999-2000 when its enterprise value was less than $30 million - YES < $30 MILLION. Its what we have been doing in Sparton Corp (SPA). Early days there. But all the heavy lifting and removal of incompetent management has been done.
    23 Oct 2011, 12:28 AM Reply Like
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