Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Laurence Fink is aligned with investors who are in the game for the long haul and he is highly critical of companies that use cash to buy back shares and increase dividends. We discussed this issue previously on the board in reference to an article in The Atlantic I posted. Today's article is from Andrew Ross Sorkin's Dealbook at the NY Times. It's technically "Off Topic," but it relates directly to what members here want: good long term performance. Fink suggests many companies are operating counter to investors' interests.
Everything in this country is short-termism. Pull forward demand from tomorrow, financial engineering, buybacks rather than building. The average holding period of a stock used to be measured in years, now its days. Politicians want easy decisions now rather than difficult planning for the future because they couldn't give a crap - any issue will eventually be someone else's problem and can be fixed temporarily if you throw enough money at it.
Some of it is likely due to lack of confidence in the future.
I'm sure Fink's Blackrock is all about Buffett-style long-term investing (lol.) Fink's attack on activist investors is a little ridiculous, what he's upset about is an issue with society as a whole. We want results yesterday, we have absolutely no interest in anything long-term or difficult. We have no energy plan, no anything plan in this country. In terms of companies, shareholders want performance now, forget any sort of long-term planning.
As for activist investing, I think it's absolutely needed in order to shake up boardrooms that are only acting in their own interests and/or helping to reshape companies that, quite frankly, need it. ARCP is one example - you have a company that tried to become one of the biggest REITs and looked for quantity above all else. Management, however, was a complete disaster and provided one bit of drama after another, leading to a huge issue after financials had to be restated after errors were intentionally not corrected. The activist investor/s initially tried to get management to stop trying to buy up everything under the sun, now I believe they managed to get new management after the accounting issues. Nelson Peltz and Dupont is a current example of an activist being necessary.
I'm not saying that this is the case in every situation or it's always right (David Winters and his futile attempt to go activist on Coke; not saying that the target was wrong, just saying that one has to pick/choose their battles and that was not one he was going to win - Buffett then dumped on Winters and his track record) but there is a place for activist investors.
@Scott- I agree with you, but sometimes without all of the inside knowledge it's hard to know when "activists" have legitimate questions, or, more usually, are trying for a quick grab and run.
Comments
Some of it is likely due to lack of confidence in the future.
I'm sure Fink's Blackrock is all about Buffett-style long-term investing (lol.) Fink's attack on activist investors is a little ridiculous, what he's upset about is an issue with society as a whole. We want results yesterday, we have absolutely no interest in anything long-term or difficult. We have no energy plan, no anything plan in this country. In terms of companies, shareholders want performance now, forget any sort of long-term planning.
As for activist investing, I think it's absolutely needed in order to shake up boardrooms that are only acting in their own interests and/or helping to reshape companies that, quite frankly, need it. ARCP is one example - you have a company that tried to become one of the biggest REITs and looked for quantity above all else. Management, however, was a complete disaster and provided one bit of drama after another, leading to a huge issue after financials had to be restated after errors were intentionally not corrected. The activist investor/s initially tried to get management to stop trying to buy up everything under the sun, now I believe they managed to get new management after the accounting issues. Nelson Peltz and Dupont is a current example of an activist being necessary.
Qualcomm was inevitably going to have someone step in with no debt and stagnant performance in recent years after a number of troubles and some recent losses (Samsung going with their own chips in the new S6.) http://www.theglobeandmail.com/report-on-business/international-business/jana-partners-pressing-qualcomm-to-spin-off-chip-business/article23896622/
I'm not saying that this is the case in every situation or it's always right (David Winters and his futile attempt to go activist on Coke; not saying that the target was wrong, just saying that one has to pick/choose their battles and that was not one he was going to win - Buffett then dumped on Winters and his track record) but there is a place for activist investors.