Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

See related case examples of

Dell Inc.

appraisal rights for intrinsic value realization

and

Walgreen Co.

stock buyback policies

"Fair Access" Home Page

"Fair Access" Program Reference

For graphs of specific company and related industry returns, see

Returns on Corporate Capital

For graphs of specific company voting for the past 5 years, see

Shareholder Support Rankings

 

 

 
 

Forum distribution:

Hundreds of activists, hundreds of pages of recipes

 

Source: The New York Times | DealBook, March 13, 2015 article



Activists Crowd Into Bank of New York Mellon Fight


March 13, 2015

Bank of New York Mellon's offices in New York.

Credit Brendan Mcdermid/Reuters.

 

 

Bank of New York Mellon is under fire. Again. Marcato Capital Management is seeking to oust Gerald Hassell, chief executive of the $44 billion financial institution. That’s after Nelson Peltz’s activist hedge fund Trian Fund Management secured a board seat. Activism is starting to look like a crowded strategy.

Sotheby’s — where Marcato’s investment preceded that of the activist hedge fund Third Point, whose founder, Daniel S. Loeb, now sits on the auction house’s board — and Darden Restaurants are among the other companies recently set upon by multiple agitators. Sometimes, as with Bank of New York Mellon, they broadly agree on the target’s shortcomings, if not how to fix them.

Aggressive investors force companies to examine their capital allocations, governance and management and to make changes, including buying and selling businesses, that can increase market valuations. As long as the benefits reach all shareholders, the cage-rattlers help bridge the gap between companies and dispersed owners. In that sense, the more the merrier.

Breakingviews


 By RICHARD BEALES

 

Too much clamor at once, however, can distract from sensible initiatives already underway. Marcato’s 118-page critique of Bank of New York Mellon shows that the fund run by Mick McGuire, a protégé of the activist investor William A. Ackman, conducted detailed analysis. That doesn’t mean it adds much to what the bank’s board already knows.

Efforts by Edward P. Garden, Trian’s representative on Bank of New York Mellon’s board, other directors and the current chief executive to identify practical solutions for the basic problem — expenses growing faster than revenue — are probably supported privately by big investment institutions, at least for now. That may matter more than Marcato’s very public contribution.

It’s all a warning sign for investors in activist funds. They’ve done well of late, collecting 21 percent in 2012 and 16 percent in 2013 on average, according to Hedge Fund Research. Even last year’s anemic 6 percent return beat the hedge fund industry average. Yet despite huge gains in 2014 for Ackman’s Pershing Square Capital Management, among others, Hedge Fund Research’s figures for average activist performance have been declining in absolute and relative terms since the 2012 peak.

More than 200 practitioners made demands of almost 350 companies last year, according to Activist Insight, in each case approaching three times the number in 2010. More and more cash chasing a dwindling number of good investment ideas may, before long, turn fund investors into the agitators.


Richard Beales is assistant editor for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

 


Copyright 2015 The New York Times Company

 

 

This Forum program is open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to access@shareholderforum.com.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.