Not too long ago, shareholder activists had free rein to be themselves. Their- in some people's minds--loud, obnoxious, mean selves. They’d send a threatening letter or two, release a borderline libelous press release and/or show up at the occasional annual meeting shouting. And companies by and large would deal with them the way overtired, solicitous parents deal with badly behaved children, which is to say by giving them a toy and hoping it shuts them up.
But now, companies have other means at their disposal: whole law firms full of activist defense teams, investment banks eager to help them diffuse a potentially volatile old man, and, of course, extensive role-playing to prepare for a profanity-laced phone call promising to have your head on a pike and your liver on their plate by the close of business.
This is a troubling development for the Dan Loebs (and Carl Icahns, etc) of the world. I mean, what is the point of having a God-given gift like being able to pen the most withering missives the English or any other language has ever seen if you can’t use it? Luckily for investors, however, there is one thing Dan Loeb and other, um, pointed activists like better even than publicly humiliating inane corporate leaderships. Two, in fact: winning and making money, which happily usually go hand-in-hand. And so if they’ve got to drop the bad-cop act in favor of a good-cop approach, expending hundreds of thousands of calories to prop up those fake smiles and keep their baser instincts in check, so be it. But we will miss the letters.
ValueAct and Relational, which typically eschew bitter public battles in favor of working with management behind the scenes, were also among the most successful at getting on the board of target companies, according to the Journal study, which reviewed U.S. activist targets with a market value of more than $5 billion….Some of activism’s more outspoken investors, including Daniel Loeb and William Ackman, lately have sought to reach the kinds of peace agreements that have been successful for Relational and ValueAct….
The nice-guy approach of ValueAct, which manages some $18 billion, has earned praise from bankers and lawyers that advise companies targeted by activists and the support of mutual funds and other big institutional investors.