This weeks WSJ had a special feature on the success of activists looking at 71 activist campaigns. For those who missed it, I recommend taking a look. The bottom line is that some activists are associated with gains in value and some not. That's not a surprising conclusion. Anecdotal analyses such as this one are interesting but are generally on a small scale and have a difficult time controlling for all of the various factors that can influence outcomes.
A more thorough analysis is contained in a recent article entitled: Myopic Investor Myth Debunked:The Long-term Efficacy of Shareholder Advocacyin the Boardroom. They examine a sample of 1,039 activist campaigns. In fairness, these authors reach a similar conclusion as the WSJ: activist representation on the board is the vehicle through which meaningful gains are produced.
In the same WSJ edition are the stories about Nelson Peltz investing $2.5 billion in GE (resulting in a 5.3% stock boost) and news that Ellen Kullman will retire after 'winning' an activist campaign at DuPont.
All the best,
Ralph
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