Jeffrey Ubben, founder of $14 billion activist hedge fund firm
ValueAct Capital, believes that some of his fellow corporate agitators
are doing undue harm to companies.
"We better be careful we don't kill the golden goose. I think the
media has to call out some of this stuff and not just celebrate the
quote unquote victories of activist investors," Ubben said Tuesday on
investment panel at the Milken Institute Global
Conference in Los Angeles. "Companies might want to push back more
because there is some bad behavior going on."
Ubben cited Keith Meister's recent investment via Corvex in
as an example of destructive activism.
He noted that Corvex, where Meister is managing partner, bought a
stake in the company, took a seat on the board and pushed ADT to take
on debt in order to buy back stock, which it did. But Corvex exited
the board and sold a large amount of shares in November
for about $450
million as the stock started to lose value. ADT shares
continued to decline and are down more than 32 percent over the past
Meister, a Corvex spokesperson and ADT representatives did not
respond to a request for comment.
"In the vernacular of the media, it's a win, the activist
triumphs. It's a loss—the company's worse off," Ubben said of the ADT
example and others. 'We have to be more balanced in how we talk about
this stuff because there are some real failures out there."
Meister, a protege of Carl Icahn, previously has said the company
was on a positive track.
"We initially invested in ADT because of its leading market
position and its potential for creating long-term shareholder value,"
Meister said in a
statement announcing the end of his directorship and
the sale of some of his shares back to the company.
"The board and management have achieved admirable results over
the past year. ADT is now on a path to achieving its optimal capital
structure and implementing a capital allocation plan that will benefit
shareholders in the long run."
The company was also supportive of Corvex in the same news
release, which noted that the investment firm would "continue to own a
meaningful number" of shares.
"Keith and our other independent board members have been
instrumental in helping management develop and implement a number of
important strategic and financial changes that will create lasting
value for our shareholders," ADT's chief executive, Naren Gursahaney,
said in November.
Ubben also said that
use of Twitter to promote his investments was damaging because it
encourages everyday investors to play stocks without looking at the
fundamentals of the company.
"The fact that activist investing is day trader fodder is bad,"
he said. "Carl tweeting is not helpful."
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