Carl Icahn and Other
Activists Eye New Possibilities Following Market Plunge
Icahn raises concerns about the broader market. However, he and
activist investment experts argue that there are investment
Feb 6, 2018
5:43 PM EST
The Dow Jones Industrial Average and the stock market overall bounced
back on Tuesday from a massive market plunge the day before.
volatility following a massive jaw-dropping 1,175 point
plunge on Monday hasn't dampened expectations for activist
investors and their continued efforts to push for share-price
improvement at U.S. corporate targets.
Consider, Carl Icahn, who plans to reveal a new investment and
possibly a new campaign in the coming days. The corporate raider
turned activist investor said on CNBC that there are severe problems
with Exchange-Traded Funds and index fund investments, all of which
could eventually lead to an earthquake in the markets if regulators
don't step in soon.
However, for now, he added, that the
U.S. companies are sound, especially following sweeping
corporate tax break legislation approved in December. Icahn said he
continues to find great values in the market today, and he may reveal
a new investment and possibly a campaign shortly.
"There are stocks that are cheap, and you can buy them. They're badly
managed, or they have some hidden jewels," Icahn said. "You can
burnish that jewel. There are great values around in the market today.
I look for things that are simplistic and obvious. You're going after
companies; you are going to see me in another one in a couple of
The possibility that Icahn will launch a new campaign in the coming
days may not be surprising to Jim Rossman, managing director and head
of shareholder advisory services at Lazard. Rossman argues that the
market downturn, in his view, has provided new openings for activists.
"It widens and makes more attractive, discounts to intrinsic value at
targeted companies, and it creates new targets at companies who make
missteps in reaction to the new volatility," Rossman said.
Rossman added that he continues to expect to see activists set new
records for activism in 2018 when it comes to the number of dollars
allocated to campaigns. In an exclusive to The Deal, Rossman said that
his team has calculated that activists deployed $6 billion in new
activist campaigns in January, significantly ahead of last year's
pace, which was a record year.
"We are expecting 2018 to set new records in activism, driven by the
opportunity to catalyze M&A and now this downturn in valuations,"
Also, Charles Elson, director of the Center for Corporate Governance
at the University of Delaware, noted that it now will be that much
cheaper for an activist to allocate capital at a company if they have
already identified an issue that they believe can be rectified.
"If there is an issue it will be cheaper for them to get involved,"
Elson said. "It certainly produces a situation where stocks are
cheaper, and it is easier for an activist to get involved. If you have
the guts, this is a good time."
However, Elson, who has previously served on activist fund director
nomination slates, suggested that he didn't believe that the market
downturn would act as a further driver of
Peltz and his efforts to shake up Procter & Gamble (PG).
The iconic packaged goods company settled with Peltz in December,
granting him a seat on the company's board. Peltz has been pushing for
a revamped look at P&G's R&D, and he wants to see the company reduce
the number of its global business units from four to three. P&G's
shares closed on Thursday at $85.85 a share, dropping over the next
few trading days to trade recently at $80.93 a share.
Even so, Elson argued that P&G's problems must be compared to its
rivals, adding that if the packaged goods company's competitors lost
market capitalization value during the past few days, then the
downturn shouldn't put a special new focus on P&G. Indeed, some major
competitors to P&G had a rocky few recent days, including Unilever NV
, Colgate-Palmolive Co. (CL),
and Avon Products Inc. (AVP).
"The fundamental issues at P&G are still there," Elson said. "But
everything is relative. The key is how you perform relative to your
Al Zdenek, president of New York-based Traust Sollus Wealth
Management, suggested that activist investors have companies in mind
for campaigns but that they often won't allocate capital to those
targets until a correction of some sort like Monday's plunge occurs.
"If you are Carl Icahn or another activist you will wait until the
right time to make your investment," Zdenek said. "You see a company
that you think is kind of rich right but but you know that somewhere
along the way a correction like this will occur."
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