April 16, 2019 - The Plaza Hotel - New York City | REGISTER NOW

2018 SUMMIT COVERAGE

  • Friendly activist Cliff Robbins on ESG investing

  • There is incredible value in Newell, it is a company with iconic brands: Jeff Smith

  • Bill Ackman takes $1B stake in Lowes*

    *See conference mentioned at 2 mins \ 25 seconds

Ackman Concerned About Lack of Diversity on Corporate Boards

New York Post (04/17/18) English, Carleton

At the 13D Monitor Active-Passive Investor Summit on Tuesday, Bill Ackman expressed concern about the lack of diversity on corporate boards. "I've actually have wanted to run a proxy contest with an all-female diverse, ethnic slate. I think it sends an incredible message and I think we'd win hands down," Ackman said. But recruiting diverse candidates, especially women, for a proxy context has been challenging, he admitted. "If you're a diverse candidate whether its gender, ethnic, or otherwise and you're interested in serving in an activist contest, get in touch with us," Ackman said.

Ackman Says He Supports ADP but Puts Management on Notice

Reuters (04/17/18) Herbst-Bayliss, Svea; Baker, Liana B.

William Ackman said on Tuesday he wants Automatic Data Processing (ADP) to succeed, but that he might return with a fight if ADP fails to perform. Ackman, whose hedge fund Pershing Square Holdings last month reported cutting its stake in ADP to a 7.2%, lost a proxy contest at the human-resources technology company last year. The investor congratulated the company for planning an analyst day in June and said he and other shareholders are looking forward to hearing how executives navigate a changed economic environment. ADP will benefit from recent tax cuts, and rising interest rates should help lift guidance, Ackman said at 13D Monitor's 2018 Active-Passive Investor Summit. "We are rooting for the company," Ackman said, adding, "If we are disappointed we will say, We look forward to seeing you at the next annual meeting." Ackman has had a tense relationship with ADP's CEO, Carlos Rodriguez. Since then, Ackman said relations have improved, and he described a four-hour-long dinner he had with Rodriguez. Ackman also praised the new CEO of Chipotle Mexican Grill Inc. (CMG), Brian Niccol. Ackman said he sees plenty of opportunity there as well, noting the restaurant chain could offer breakfast, dessert, longer hours, and drive-through options. Pershing owns 10.36% of Chipotle. Meanwhile, Pershing Square is again in the red in early 2018, but Ackman expressed optimism that a turnaround is possible. "I hope we are on our way back to rebuilding our record," he said.

Bill Ackman Says Newell Made 'Deal With the Devil' in Icahn Agreement

CNBC (04/17/18) Franck, Thomas

Pershing Square's Bill Ackman said Tuesday that Newell Brands (NWL) was so afraid of losing a proxy fight that it made a kind of "deal with the devil" in appointing Carl Icahn's board picks in March, but quickly clarified that he "meant that in the most positive way." Ackman delivered his comments at the 13D Monitor Active-Passive Investor Summit in New York. "What Carl's doing here is he's basically been given control of Newell," Ackman said. "He's got five seats on the board or something like that: his son, a whole bunch of affiliates, not the kind of board I think this audience would elect for its independence necessarily." News of Icahn's board appointments at Newell last month came soon after he unveiled a 6.86% stake in the company and said he could seek a board seat. His designated directors are Brett Icahn, Patrick Campbell, Andrew Langham, and Courtney Mather. "They got [the board seats] by negotiation, Carl's style of negotiation, and just leveraging off the fact that another activist ran a full slate for the company," Ackman said. Newell has also been under pressure from Starboard Value, which is seeking to replace Newell's CEO and its entire board. "We do believe that there is incredible value at Newell," said Starboard CEO Jeff Smith at the conference on Tuesday. "Unfortunately, it's lost its way."

Hedge Fund Takes a Stake in Apogee to Halt Its Buying Spree

Bloomberg (04/17/18) Deveau, Scott

Engaged Capital has acquired a 6% stake in Apogee Enterprises Inc. (APOG) and is urging the company to end its acquisition spree, according to sources. Engaged believes Apogee, which counts New York’s One World Trade Center among its customers, is underperforming competitors, the fund’s Chief Executive Officer Glenn Welling said at the 13D Monitor Active-Passive Investor Summit in New York., and could be worth as much as $75 per share by February 2020 if it implements its recommendations. Apogee stock closed Monday at $41.37 in New York. Engaged Capital has held constructive talks with the company about ways to boost its performance, the sources said, and it also wants the company to redirect its free cash to buy back shares. Minneapolis-based Apogee, despite its core business being strong, has made a series of missteps, including several big transactions that it has failed to integrate properly, the sources said. Apogee traces its roots back to a single glass shop in 1949, and now counts New York's One World Trade Center among its customers. It currently operates in three segments serving the commercial construction industry, including architectural framing, glass installation, and custom picture framing.

Blue Harbour Says Open Text Can Boost Value Via M&A

Bloomberg (04/17/18) Deveau, Scott

At the 13D Active-Passive Investor Summit in New York on April 17, Blue Harbour Group CEO Cliff Robbins said Open Text Corp. (OTEX) is "mispriced and inexpensive" and that the Canadian Software company could be worth at least 50% more if it undertook a transformational transaction or sold itself. “This is a very high quality business,” said Cliff Robbins, Blue Harbour’s chief executive officer, at the 13D Monitor Active-Passive Investor Summit in New York Tuesday. “This team knows how to do deals and we’re going to help them.” Blue Harbour, which owns a 3.5% stake in Open Text, plans to help the company boost its U.S. investor base and push management to pursue buybacks and increase dividends. "There's always a potential strategic sale down the road," Robbins said, adding that the company has a strong track record of mergers and acquisitions and is sitting on about C$1.2 billion in dry powder for potential deals. "As their lead stockholder, we plan to work with them to get this money to work."

Marcato's McGuire Bets Rayonier Advanced Materials Stock Will Jump

Reuters (04/17/18) Herbst-Bayliss, Svea

Hedge fund manager Mick McGuire says that Rayonier Advanced Materials Inc.'s (RYAM) stock price could triple if the company focuses on integrating a recent acquisition and slashing costs. McGuire's Marcato Capital Management is a longtime shareholder in the company, but he spoke about his stake publicly for the first time on Tuesday at the 13D Monitor's 2018 Active-Passive Investor Summit. Rayonier Advanced Materials, a chemical company which focuses on cellulose-based products, recently made a "very accretive acquisition" and there are plenty of "self-help" actions to help lift the share price, according to McGuire. Rayonier Advanced Materials finalized its acquisition of Tembec in late 2017. McGuire said Rayonier's stock price could rise to somewhere between $34 to $60 a share from its current level of $21.82 in about three years.

Starboard Value's Jeffrey Smith: Newell Brands Is 'Extremely Undervalued'

CNBC (04/17/18) Kim, Tae

In an April 17 interview from 13D Monitor’s Active-Passive Investor Summit on CNBC's "Squawk on the Street," Starboard Value CEO Jeffrey Smith expressed optimism about his firm's investment in Newell Brands (NWL). Smith, who revealed in a recent filing that his hedge fund is seeking four board seats at the company, said, "We do believe that there is incredible value at Newell. It's a company with iconic brands...It's a great company [with] great employees. Unfortunately, it's lost its way." Investor Carl Icahn last month entered into an agreement with Newell Brands that gave him control over multiple board seats. "Carl and I necessarily don't see things that differently. We've had conversations about the company," Smith said. "We both think the company is extremely undervalued. We both think there are operational improvements that are needed...the difference in opinion right now is what's the best possible board for shareholders going forward."

Powerful Investors Are Pushing for More Women on Corporate Boards

Yahoo! Finance (04/19/18) La Roche, Julia

Gender diversity in boardrooms was a hot topic at the recent 13D Monitor Active-Passive Investors Summit in New York. Pershing Square Capital Management's Bill Ackman said, "I actually have wanted to run a proxy contest with an all-female, diverse ethnic slate. First of all, I think it sends an incredible message and I think we would win hands down. I really mean that." He pointed out that it is difficult for him to recruit directors, particularly women, in the activist context. "I think as more women serve on activist slates, it will make other women more comfortable on activist slates. If you're a diverse candidate, whether it's gender, ethnic, or otherwise, and you're interested in serving in an activist context, get in touch with us," Ackman said. "What the shareholders can do is...make clear the fact that someone who hasn't served on a board before shouldn't disqualify them from being a credible candidate for a board. One way to make it difficult for people to break the glass board ceiling is to say one of the qualifications for serving for winning on an activist slate is that you have to have already served on a board. That kind of stuff creates barriers that are problematic." Meanwhile, Blue Harbour CEO Cliff Robbins noted that "when I'm sitting down now with a CEO before I invest...I'm asking them a bunch of questions—'Tell me what you think about gender pay equality. Are there opportunities for women and minorities in your company? Do you have a diverse board?'" He emphasized the importance of investors holding those companies accountable. He added, "When I'm calling up my CEO three months after we made the investment, in addition to saying, 'Where are we on this spinout? Where are we on the balance sheet? Where are we on the margins?' I'm saying, 'Where are we on that commitment you made to me to make the board more diverse?'"

2017 SUMMIT COVERAGE

  • Ed Garden’s interview with David Faber

  • Keith Meister’s interview with David Faber

  • Jeff Smith’s interview with David Faber

  • ValueAct’s newest position in KKR

Activist ValueAct says invested in private equity pioneer KKR

Reuters (04/27/17) Michael Flaherty, Svea Herbst-Bayliss

ValueAct Capital said it has invested in asset management group KKR & Co, as the $16 billion activist investment fund deepens its reach into the financial sector. The holding brings together a San Francisco-based activist investor with the legendary leveraged buyout shop founded and still run by Henry Kravis and his cousin George Roberts in 1976. Shares of KKR were up more than 6 percent. "One of the oldest and most storied LBO firms that has operated through market cycles has built up a tremendous brand," ValueAct President Mason Morfit said at the Active-Passive Investor Summit. Morfit said ValueAct's current exposure to the stock is under 5 percent. "The company has 8 to 10-year locked up capital and generates a great management fee," said Morfit. "I think the future is quite bright." ValueAct had not previously disclosed its position in the company. ValueAct, based in San Francisco, owns major stakes in some of the most prominent U.S. companies, including software maker Microsoft Corp., media group 21st Century Fox Inc. and energy company Baker-Hughes Inc. Morfit, who is the No. 2 person at ValueAct behind co-founder and CEO Jeffrey Ubben, is on the board of Microsoft. The fund also has holdings spread across the financial sector, including a stake it built last year in investment bank Morgan Stanley. Morfit said on Thursday that he likes KKR's business at a time that investors are leaving actively managed funds in favor of both alternative investments and passive investments. Alternative assets have compounded at a high rate and Morfit says there is no end in sight for that trend with demand coming from Asia and the Middle East.

KKR Finds an Activist at Its Gate as ValueAct Reveals Stake

Bloomberg (04/27/17) Beth Jinks, Melissa Mittelman, David Carey

KKR & Co., the original Barbarian at the Gate, now has an activist knocking on its own front door. ValueAct Capital Management has amassed a stake in the buyout giant in an investment that puts KKR co-founders Henry Kravis and George Roberts in an unfamiliar position: Under an investor’s spotlight rather than holding the torch themselves. But while KKR built its name on a series of not-always-friendly deals in the 1980s, the relationship with Jeffrey Ubben’s hedge fund seems amicable. ValueAct has held friendly talks with the investing firm, including discussing the possibility of converting KKR from a partnership to a corporation, according to a person familiar with the discussions. The switch may be beneficial under potential changes to the U.S. tax code proposed by President Donald Trump, said the person, who asked not to be identified because the talks were private. KKR welcomes ValueAct’s investment, Scott Nuttall, KKR’s head of global capital and asset management, said Thursday on the firm’s first-quarter earnings call. “We have had interactions with them and they’ve been great,” Nuttall said. “We like having smart, long-term investors as shareholders.”

2016 SUMMIT COVERAGE

  • Meister on activism, favorite stocks

  • Ed Garden: General Electric 'amazingly resilient'

  • Starboard's Smith seeks 9 seats at Yahoo

  • Blue Harbour's Robbins: AGCO does all the right things

Starboard Value's Jeff Smith: May Need to 'Pick Up the Pieces' of Yahoo

CNBC (04/19/16) Rosenfeld, Everett

Jeff Smith, CEO of Starboard Value, said Tuesday he is preparing to potentially pick up the pieces of a broken Yahoo (YHOO). Speaking from 13D Monitor's Active-Passive Investor Summit in New York City, Smith explained that he has launched a proxy fight for Yahoo in case its board is unable to do what needs to be done. "They're going to feel the pressure to make sure they're doing the right thing for the shareholders in order to not get to the result of a change of board members," Smith said. "But we need to protect ourselves because if we get to the annual meeting and the company has not moved forward as they're supposed to — there's a question here as it relates to capability and credibility of the board members and management team in terms of running the process. If we get to the end, and they haven't been successful as it relates to getting the company sold — the core business sold — well we're going to need to pick up the pieces," he added. The ideal outcome for Yahoo, Smith stated, is for its core business to sell for "the highest possible price that they can get," but he declined to say how much he thought that should be. Smith has said he sees "a lot of opportunity" in Yahoo.

U.S. Activist Investors Finding Fewer Opportunities; Compromise More Common

Reuters (04/19/16) Herbst-Bayliss, Svea; Delevingne, Lawrence; Flaherty, Michael

At a prominent activist investor conference on Tuesday, panelists appeared less optimistic about upcoming corporate board contests and focused on current holdings rather than presenting bold, new investment opportunities. “We have stopped holding our breath waiting on new activist campaigns,” Don Bilson, head of event-driven research at Gordon Haskett, said in a note ahead of the 13D Monitor Active-Passive event in New York. Hedge fund managers in attendance discussed the usual complaints about complacent boards and underperforming companies but seemed to acknowledge the increased difficulty in finding new opportunities. According to 13D Monitor data, the amount of money invested by activists in the first quarter dropped by more than 75% to $1.4 billion, down from $6 billion a year ago. Lawyers and executives from proxy advisory firms also agreed that proxy contests are increasingly settled ahead of a vote. “There are still about 30 to 40 votes but there are so many more fights” that are resolved with some concessions, said Okapi Partners President Bruce Goldfarb. The HFRI Event Driven Activist Index, a sector benchmark, is down 4.26% for 2016 through March. It gained just 1.15% for 2015 after rising 6.57% the previous year.

Blue Harbour Group's Robbins Says AGCO Offers Margin Growth

Bloomberg (04/19/16) Jinks, Beth

Blue Harbour Group CEO Cliff Robbins believes farm-equipment supplier AGCO Corp. (AGCO) will benefit from improved margins and an eventual uptick in agricultural spending. Speaking Tuesday at 13D Monitor's Active-Passive Investor Summit in New York, he said AGCO is performing strongest in the European farming equipment market and has growth potential in Brazil. In addition, he noted, AGCO's work to standardize some equipment engineering will reduce costs. Blue Harbour owns approximately 7.9% of AGCO's shares, manages about $3.2 billion, and generally prefers to discuss corporate changes with management instead of engaging in proxy fights or other aggressive moves.

Starboard's Smith Warns a Full Board Sweep Is Not Always Possible

Reuters (04/19/16) Herbst-Bayliss, Svea; Flaherty, Michael

Starboard Value’s Jeffrey Smith says replacing an entire board is often the best way to revive a struggling company, but that tactic is not always possible. A full sweep of a board “seems to work really well,” Smith said at 13D Monitor's Active-Passive Summit. He added that it helps activist investors earn trust with management, and lays the foundation for a true partnership. Starboard is currently angling to oust the entire board at Yahoo Inc. (YHOO), a feat it accomplished two years ago at Darden Restaurants Inc. (DRI). Smith just stepped down from Darden's board after 18 months of working to turn around the business. While a full sweep often works best, Smith said, he acknowledged that companies are much more ready to find solutions so they can avoid the embarrassment and disruption of a costly proxy fight. In addition to Yahoo, Starboard is pursuing six board seats at Depomed Inc. (DEPO), frustrated that the company rejected a takeover bid. “We are in the process,” Smith said. He added that Starboard may start other contests, but gave no further hints. “It will be a case-by-case basis.”

Blue Harbour's Robbins dishes: What I look for in a CEO

CNBC (04/19/16) Balakrishnan, Anita

Cliff Robbins, CEO of Blue Harbour Group, which manages capital for institutional investors like endowments and pension funds believes when you invest in a company for two years or more, you need to invest in the management team. When deciding whether to invest in agricultural equipment maker AGCO, for instance, it was crucial to spend time with the CEO, Martin Richenhagen, and get to know his record. "We came to the conclusion that this gentleman was the type of man we'd want to back," Robbins said. "[He's] looking for ways to win. Right now, while business is a little soft, he's working on his margin profile, as he should be, to improve the margins in the business. I think he's open-minded to buying back stock, and he knows he has a very strategic asset, as well." Robbins spoke from the 13D Monitor Active-Passive Investor Summit in New York City, which focuses on shareholder activism.

2015 SUMMIT COVERAGE

  • Jana Urges
    Qualcomm Split

    Jana asks Qualcomm to consider spinning off its chip unit from its patent-licensing business and accelerate share repurchase program.

  • Activist Investing Is Not a Fad

    Keith Meister, Corvex Management, weighs in on the state of the activist investor and why activism does well.

  • Starboard’s Smith
    Proud of Darden’s
    Turnaround

    Cheap gas and better weather helps Darden, but it's not all smooth sailing ahead.

  • At Trian, We Put
    Our Money Where
    Our Mouth Is

    Ed Garden, Co-Founder and Chief Investor of Trian Partners, discusses Trian's plans for DuPont.