activist fund / activist shareholder / activist investor

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pages: 272 words: 76,154

How Boards Work: And How They Can Work Better in a Chaotic World by Dambisa Moyo

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Web Services, AOL-Time Warner, asset allocation, barriers to entry, Ben Horowitz, Big Tech, bitcoin, Black Lives Matter, blockchain, Boeing 737 MAX, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon footprint, collapse of Lehman Brothers, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, cryptocurrency, deglobalization, don't be evil, Donald Trump, fake news, financial engineering, gender pay gap, geopolitical risk, George Floyd, gig economy, glass ceiling, global pandemic, global supply chain, hiring and firing, income inequality, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, knowledge economy, labor-force participation, long term incentive plan, low interest rates, Lyft, money: store of value / unit of account / medium of exchange, multilevel marketing, Network effects, new economy, old-boy network, Pareto efficiency, passive investing, Pershing Square Capital Management, proprietary trading, remote working, Ronald Coase, Savings and loan crisis, search costs, shareholder value, Shoshana Zuboff, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, sovereign wealth fund, surveillance capitalism, The Nature of the Firm, Tim Cook: Apple, too big to fail, trade route, Travis Kalanick, uber lyft, Vanguard fund, Washington Consensus, WeWork, women in the workforce, work culture

Strategic investors usually gain seats on a board after the company has been acquired in a strategic deal, and therefore have likely operated a similar business. Activists tend to use financial tools such as repo markets to build up a stock position in the company. Strategic investors, generally, are focused on the long term, while activist investors can be in it for short-term stock appreciation. Many observers assume that strategic shareholders are always a constructive, positive influence, while activist shareholders are invariably negative and disruptive. However, the reality is far more nuanced. Left unchecked, the disproportionate financial power of strategic investors can grant them too much control over critical decisions such as selecting the CEO, setting the company’s strategy, and choosing whether to sell the company and at what price.

“Cameron Tells Pfizer Wants More Commitments for AstraZeneca Deal.” Reuters, May 7, 2014. https://uk.reuters.com/article/uk-pfizer-astrazeneca-cameron/cameron-tells-pfizer-wants-more-commitments-for-astrazeneca-deal-idUKKBN0DN0S120140507. Jessop, Simon, and Sinead Cruise. “Activist Investor Bramson May Get Bloody Nose at Barclays AGM.” Reuters, April 26, 2019. https://uk.reuters.com/article/uk-barclays-agm-activist/activist-investor-bramson-may-get-bloody-nose-at-barclays-agm-idUKKCN1S21BZ. Jiang, Bin, and Tim Koller. “Paying Back Your Shareholders.” McKinsey & Company, May 1, 2011. www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/paying-back-your-shareholders.

In my time serving on corporate boards, I have witnessed and helped respond to some of the most extreme and testing situations in the corporate world, including the death of a chairman of the board while he was in office; multiple CEO successions, and hiring and firing of chief executives; buying and selling companies, including the sale of a global corporation for $100 billion, the largest global mergers and acquisitions transaction in 2016; enormous regulatory fines stemming from a crackdown on corporate behavior; activist shareholders seeking to disrupt the company strategy; the unique challenges of having an insider—a large, dominant, usually family member—shareholder on the board; expropriation of company assets by host governments; and massive corporate restructuring prompted by a share-price collapse. In short, I have been through virtually everything, save a corporate bankruptcy.


pages: 302 words: 80,287

When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle by Scott Wapner

activist fund / activist shareholder / activist investor, AOL-Time Warner, asset allocation, Bear Stearns, Bernie Madoff, Carl Icahn, corporate governance, corporate raider, Credit Default Swap, deal flow, independent contractor, junk bonds, low interest rates, Mark Zuckerberg, Michael Milken, multilevel marketing, Pershing Square Capital Management, Ponzi scheme, price discrimination, Ronald Reagan, short selling, short squeeze, Silicon Valley, Tim Cook: Apple, unbiased observer

.… Convey his energy, enthusiasm, and vision for Herbalife.” It advised Herbalife to “right-size the threat” and to “keep the focus away from Ackman personally and on the substance of his criticism. Any publicity centered on Ackman, even negative publicity, can play into his public persona as an ‘activist shareholder.’” The battle with Ackman had consumed the company since December 2012, when Ackman had first laid out his stunning case and his billion-dollar short. Now—finally—for the very first time, Johnson and Herbalife’s other executives felt they could begin to understand why the war had happened in the first place.

At least now we don’t have to worry about that! NOTES Introduction: The Masters of the Universe 1. Leo E. Strine Jr., “Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System,” Yale Law Journal, April 2017. 2. Jeffrey Sonnenfeld, “Activist Shareholders, Sluggist Performance,” Wall Street Journal, April 1, 2015. Chapter 2: The Pitch 1. William Cohan, “Is Bill Ackman Toast?,” Vanity Fair, Oct. 17, 2016, www.vanityfair.com/news/2016/10/is-bill-ackman-toast; Gretchen Morgenson and Geraldine Fabrikant, “A Rescue Ploy Now Haunts a Hedge Fund That Had It All,” New York Times, Jan. 19, 2003. 2.

.: characterized) public persona of, 8 restructuring Herbalife short position, 148–149 at Robin Hood Investment Conference, 149–150 sister Jeanne, 25 at Sohn special event in 2012, 78–80, 81, 83, 89 statement to author about Hallwood issue, 102 taking Pershing Square public, 180 and Valeant, 174–175, 178, 210 visit to FTC headquarters, 142 worst investment of, 40 See also Pershing Square Capital Management Ackman-Ziff real-estate brokerage firm, 24 Actavis, 170 activists. See consumer activists; shareholder activists Albright, Madeleine, 148 Alexander’s department store chain, 27 Allen, Claudia, 38 Allergan company, 169 Allied Capital, 62–63 Allied Financial, 58 American Airlines, 124 American Car and Foundry, 121–122 Amway, 44, 59, 66 Andry, Doran, 20, 79–80 AOL, 127 Apple, 1, 39, 184–188 buyback of Icahn’s stock, 184, 185, 186–188 arbitrage, game of, 118, 119 Auletta, Ken, 115 Automatic Data Processing Inc., 215 AXA Center on Seventh Avenue, 76, 78, 89, 111, 158, 159–162 Bank of England, 134, 139 bankruptcy, 10, 16, 27, 29, 31, 63, 125, 126 of Lehman Brothers, 64 Barbarians at the Gate, The, 126 Barnes and Noble, 37, 70 Bartz, Carol, 92 Bausch and Lomb, 169 BBC, 162 Bear Stearns, 11 Beckham, David, 53 Benoit, David, 197 Berkowitz, David, 27–29, 31, 33 Berkshire Hathaway, 171 Big Short, The (Lewis), 12 Biogen, 128 Boesky, Ivan F., 121, 125–126 Boies, Schiller firm, 97, 176 Borders Group, 70–71 Boston Market restaurant chain, 62 Botox, 169 Boyd, Roddy, 173 Brazil, 58 Brussels, Belgium, 19, 54 Buffett, Susan, 27 Buffett, Warren, 26, 27, 129, 171, 211 BurnLounge company, 14 Business Insider, 103, 109, 147 BuzzFeed News, 213 Calderon, José, 143 Canadian Pacific railway, 71, 72, 209 Carlisle, Tobias, 119 Carmona, Dr.


pages: 302 words: 86,614

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja, Myron Scholes, Mohamed El-Erian

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset allocation, asset-backed security, backtesting, Bear Stearns, Bernie Madoff, book value, Bretton Woods, business process, call centre, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, en.wikipedia.org, family office, financial engineering, fixed income, global macro, high net worth, high-speed rail, impact investing, interest rate derivative, Isaac Newton, Jim Simons, junk bonds, Long Term Capital Management, managed futures, Marc Andreessen, Mark Zuckerberg, merger arbitrage, Michael Milken, Myron Scholes, NetJets, oil shock, pattern recognition, Pershing Square Capital Management, Ponzi scheme, proprietary trading, quantitative easing, quantitative trading / quantitative finance, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, Savings and loan crisis, short selling, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, stock buybacks, systematic bias, systematic trading, tail risk, two and twenty, zero-sum game

“Ackman on the Rating Agencies: ‘Wait to Rate,’” New York Times Dealbook, June 2, 2010, http://dealbook.nytimes.com/2010/06/02/ackman-on-the-ratings-agencies-wait-to-rate/. “Ackman Questions Lampert on Sears,” New York Times Dealbook, May 6, 2008, http://dealbook.nytimes.com/2008/05/06/ackman-grills-lampert-on-sears/. “Activist Investor Bids for Barnes & Noble, Borders Merger,” Business Pundit, December 7, 2010, www.businesspundit.com/activist-investor-bids-for-barnes-noble-borders-merger/. “Bill Ackman.” http://en.wikipedia.org/wiki/Bill_Ackman. “Bill Ackman Buys Sears Holdings Corp., Target Corp., Greenlight Capital Re, LTD., Sells Staples Inc.” Guru News, November 17, 2007. http://www.gurufocus.com/forum/read.php?

“S&P has rated it CCC,” says Weinstein. “Not too good, and Moody’s is just a little better, at B—. We actually think it’s kind of a solid single B.” Weinstein then consults the credit spread, which at 230 basis points for CDS is more typical of a better-rated BB company. “We think a leveraged company with activist shareholders and an aggressive stock buyback program should not be trading at 230 basis points,” says Weinstein. And actually it was as low as 150 basis points in 2010 when we put the trade on. But we’re keeping it. And we own the stock.” Meanwhile, Weinstein keeps other developments in mind. “The restaurant sector has seen more than its share of LBOs, with Burger King as the most important example.

This interesting book takes you on a journey through the fascinating and still-mysterious world of successful hedge fund managers. You will make many interesting, and in some cases surprising stops along the way, getting to know managers, their philosophies, styles, quirks, and working practices. Maneet will tell you about the world of activist investors whose objective is to unlock hidden value in companies, either through operational improvements or through the more controversial company restructurings and asset stripping. She will also expose you to the inherently cynical and always-suspicious short sellers who obsessively plunge into the details to sort out underlying fundamentals from often intricate and possibly obfuscating packaging.


pages: 197 words: 53,831

Investing to Save the Planet: How Your Money Can Make a Difference by Alice Ross

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, An Inconvenient Truth, barriers to entry, British Empire, carbon footprint, carbon tax, circular economy, clean tech, clean water, coronavirus, corporate governance, COVID-19, creative destruction, decarbonisation, diversification, Elon Musk, energy transition, Extinction Rebellion, family office, food miles, Future Shock, global pandemic, Goldman Sachs: Vampire Squid, green transition, Greta Thunberg, high net worth, hiring and firing, impact investing, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, lockdown, low interest rates, Lyft, off grid, oil shock, passive investing, Peter Thiel, plant based meat, precision agriculture, risk tolerance, risk/return, sharing economy, Silicon Valley, social distancing, sovereign wealth fund, TED Talk, Tragedy of the Commons, uber lyft, William MacAskill

AB InBev 176 active funds 30, 31, 41, 83, 96, 97, 98, 125 activist investors 69–77, 84–90, 100–101 advertising 77, 79, 80, 151, 202 AGMs (Annual General Meetings) 70–73, 84, 87, 104 agriculture 85, 120, 145–62; alternative food 22, 145–56; farming 22, 156–9; food waste 149, 159–61; greenhouse gas emissions 148–9, 150, 156–8, 159, 160; high-risk investors 162; low-risk investors 161; medium-risk investors 161–2; vegan diet/alternative meat 146, 149–56, 162 air conditioning 18, 38–9, 164, 170–71, 179, 194 alternative investment market (AIM), London 25, 31–2, 142 Amazon (online retailer) 19, 73–4, 157, 197 American Council for an Energy-Efficient Economy 165 ammonia, green 142–3 Amundi IS Equity Europe Low Carbon fund 63 Angel Academe 155 angel investing 37–9, 43, 155, 156, 160, 162 An Inconvenient Truth (film) 2 Anterra Capital 157, 160 apartheid, South Africa 3, 48, 51–2 Apple 33, 38–9, 91–2, 127 Applied Materials 167 Arctic, energy exploration in 66, 82 As You Sow 83, 104 asset classes see individual asset class name asset managers 11, 12, 58, 74, 88, 89, 90, 95, 119, 168 aviation 18, 22, 99, 129, 140–42, 167, 194, 199 AXA Investment Managers 77, 88, 95 Balk, Josh 146, 153–4 Ballard Power 138 Bank of America Merrill Lynch 6, 84 Bank of England 193 Barclays Bank 48, 73, 75, 182–3, 200 Barry, Michael 45, 46, 51, 55–6, 59, 60 batteries 15, 22, 113, 115–16, 128, 172; battery infrastructure 128; battery swapping 128, 139; charging 22, 113, 128, 130, 139–40, 203; green hydrogen 138; lithium-ion 115–16, 136, 137; role of 136–8 ‘best in class’ companies 7, 10, 92, 100, 134, 161–2, 176 Beyond Carbon 16 Beyond Meat 7, 15, 35, 36, 135, 150, 152–3, 154, 155, 162 Bezos Earth Fund 19 Biffa 174 billionaires, ‘green’ 14–17, 18, 19, 120, 124, 126 biofuels 22, 113, 140–43 biomass 110, 112 Bioy, Hortense 85, 197–8 Birol, Fatih 112, 202–3 BlackRock 14, 25, 26, 88, 89–90, 97, 199 Blood, David 1–2, 54, 135 Bloomberg 15, 104, 133 Bloomberg, Michael 16, 17, 19 Bloomberg New Energy Finance 136, 139 BMO European Equity (BMO Sustainable Opportunities) 11 BMO Responsible Global Equity fund 91–2 BMW 15, 129, 134, 137, 140, 143, 144 BNP Paribas 134, 161, 180, 181 BNY Mellon 177 Bollag, Benjamina 155–6 bonds 20, 26, 31, 32–4, 41, 44, 65, 66, 67; divestment and 65, 66, 67; green bonds 33, 42, 67, 83, 93–6, 195; transition bonds 67 Bond, Simon 67, 94 BP 4, 5, 9, 53, 76, 83, 99–100, 101, 102, 104, 108, 111, 114, 140, 188; net zero emissions by 2050 commitment 76, 79–80, 116, 186, 199; ‘Possibilities Everywhere’ ad campaign 79 Breakthrough Energy Ventures (BEV) 19, 52, 120, 121–2, 123, 124, 135, 137 Brin, Sergey 18 British American Tobacco (BAT) 54, 54n Brown Advisory Sustainable Growth Fund 197 Bruun, Michael 107, 108, 137 ‘Build Back Better’ slogan x, 201 Burger King 151–2, 153–4 Cambridge University 56–7, 65–7, 74–5; Institute for Sustainability Leadership 56–7 Canada Pension Plan Investment Board 137, 140 Candriam SRI Equity Climate Action fund 95, 165–6, 67 Capital Group 88 capital recycling 66, 67 Carbon Brief 198 carbon dioxide emissions 2, 7, 14, 16, 21, 22, 32, 33, 47, 53, 67, 83, 86, 87, 88, 89, 90, 95, 99, 102, 108–9, 168, 169, 180, 184, 191, 194, 202, 203; agriculture and 148–9, 150, 156–8, 159–60; carbon capture, use and storage (CCUS) 5, 117; carbon-offsets 5, 28, 63, 79, 150, 203; carbon price 187–90; coronavirus lockdown and 71, 109–10, 198, 199; disclosing 98, 103; divestment and 50–52; energy efficiency and 164, 165, 168–9, 172, 173, 175, 176, 177, 178; ‘net zero’ targets 5, 63, 71, 74, 76, 78, 79–80, 116, 126, 169, 176–8, 183, 186, 203; Paris Agreement (2015) and 4–5, 10, 42, 73, 74–5, 76, 78, 109–10, 111, 117, 132, 165, 188, 193; peak in 5, 111–12; scope 1 185–6; scope 2 185–6; scope 3 81, 175, 176, 185–7; transport and 129–34, 140–41, 142, 143 Carbon Tracker 53, 66, 180 Carney, Mark 190, 193–4 Cartier 11–12 CDP (formerly the Carbon Disclosure Project) 80–81, 86, 91, 153, 177, 178, 203 cell-based meat 155–6 Chargemaster 140 charging, battery 22, 113, 128, 130, 139–40, 203 charitable giving/philanthropy 5, 13, 14, 16, 19, 43, 123, 124 Chevron 116–17, 140 China 15, 61, 76, 114, 128–9, 131, 132, 164, 166, 170, 175 Church of England 74 circular economy 22, 163–79 cleantech crash (2007–8) 113–14, 171 Clearwater Fine Foods 142 ClientEarth 79 Climate Action 100+ initiative 76, 78, 83, 86, 105 Climate Bonds Initiative 94 Climate Group 86 Climate Leadership Council 188–9 climate solutions funds 6, 42, 125–6 coal 16, 21, 45, 46, 49, 52, 53, 67, 82, 87, 90, 109, 110–11, 112, 125, 183, 184, 187, 198 Columbia Threadneedle 67, 94 coronavirus pandemic ix–x, 22, 55, 64, 71, 90, 109–10, 112, 131, 132, 137, 138, 141, 151, 158, 168, 174, 175, 189, 196–8, 199–200, 201, 202, 203, 204 corporate bonds 32–3, 94 Cramer, Jim 61 Crop One Holdings 158–9 crowdfunding 43, 118, 119 CSM Energy 82–3 Curtis, Richard 40–41, 201 Deloitte 9, 191 Delta Airlines 79 Devon Energy Corp 194 diesel 183–4, 191 Dimensional Global Sustainable Core Equity 63 Dimon, Jamie 188 disruptive companies 52, 146, 153–4, 157, 171 dividends 31, 54, 54n, 55, 61, 68, 70, 80, 126, 144, 197 divestment 20–21, 22, 32, 45–68, 72, 82, 84, 85, 86, 92, 98, 104, 117, 185; capital recycling 66; economic case for 52–9; emissions reductions and 50–52; growth of movement 45–7; history of movement 47–50; how to invest after you divest 62–5; moral grounds 62; outside of equities 65–8; performance grounds 62; public shaming and 60–61 DNV GL 131, 136 Doerr, John 114 Dong Energy 107–8, 137 Draper Esprit 140 Drax 112 DS Smith 175 DWS 11, 77, 168 DyeCoo 173 early-stage investors 18, 38, 64, 121, 135, 140, 142, 148, 155, 179 EDF Energy 140 Edwards, Jenny 69–72, 73, 77, 84 electricity supply 112, 118, 120, 121, 125, 159, 169–70, 172, 185, 187, 194 electrification of transport 7, 10, 15, 29, 64, 73–4, 76, 113, 120, 127–44, 157, 163, 164, 194, 203; cars 7, 10, 15, 29, 64, 76, 103, 119, 129–30, 132–3, 134, 136, 157, 163, 164; mopeds 22, 127, 128 electrofuels 141 Ellen MacArthur Foundation 172 Emirates Flight Catering, Dubai 158 Energy Action Coalition 118 energy, investing in 11, 16, 35, 42, 80, 107–26, 138, 143, 157, 166, 167–8, 202–3; carbon dioxide emissions and 108–10; clean energy solutions 120–24; cleantech, new dawn for 115–20; cleantech crash (2007–8) 113–14, 171; entrepreneurs/Mosaic 118–20; high-risk investors 126; how to invest in clean energy 124–6; low-risk investors 126; medium-risk investors 126; primary energy consumption 111–12; renewable energy investment, history of 113–14; transitioning away from oil and gas/energy transition 19, 21, 39, 76, 84, 110–13, 123, 140, 194 energy efficiency, investing in 22, 33, 110, 161, 163–79, 183, 203; building and construction sectors 168–70; circular economy and 171–6; high-risk investors 178–9; low-risk investors 178; medium-risk investors 178; next-gen investors 170–71; semiconductor companies 143, 166–7, 178; weight reduction, investing in 167–8; zero emission pledges 176–8 engagement/effecting change 69–106; activist shareholders 69–74, 84–90; disclosure, improving 80–84; fund managers 73–4, 77–80; green bonds 93–6; greenwashing 77–80; passive investing 96–104; pension manager, putting pressure on your 90–93; professional fund managers and 75–7; retail investors/small investors 69–74, 84–90 ENI 117, 191 Environmental Recycling Technologies (ERT) 24–5 environmental score, ESG investing and 9, 10–11 see also ESG (environmental, social and governance) investing EO 139–40 equities 20, 26, 30–32, 33–4, 41, 44, 53, 64, 66, 68, 95, 195 ESG (environmental, social and governance) investing 61, 62, 66, 90, 95, 132–3, 147, 181, 182, 183, 184, 190, 191, 195; coronavirus and/future of 196–200; defined 8–12, 29–30, 44, 190, 195; ETFs 97; passive investor 99–104; pension funds and 92, 93; score and debt 82, 98 ETFs (exchange-traded funds) 30, 96–7, 100–1, 102, 124–5 European Investment Bank 94 European Union 103, 129, 130, 141, 169, 176, 183, 186, 191 ex-fossil fuel funds 42, 62, 63, 68, 85, 106 Extinction Rebellion 13 ExxonMobil 53, 61, 89, 116, 117, 188 family offices 18–19, 122–3, 142, 156, 182 Farmobile 157 fashion 28, 62, 175–6 Fidelity 103 financial advisers 12, 27, 29, 43, 44, 49, 95, 105, 182, 184 Financial Conduct Authority 192 financial crisis (2008) 1, 3–4, 17, 29, 114 Financial Stability Board 58 Fink, Larry 14, 90 Fluor 89 food see agriculture Food Freshness Technology 160 Ford Motors 177 fracking 79 FTSE 100 30, 31, 54, 55, 56, 103, 112, 175; Environmental Opportunities All Share index 56; Global All Cap index 56; TPI Climate Transition Index 74 fuel: aerodynamic systems and 39; alternative/biofuels 22, 53, 111, 113, 140–43; cells 10, 138, 142, 144, 154, 166; aviation and see aviation; fossil see individual fuel type fund managers 10, 11, 12, 43, 49, 60–61, 66–7, 89, 95, 97, 98, 105, 108, 143, 181; activist 13, 14, 30, 73–6, 83, 85, 86, 89, 91; energy efficiency and 166, 167, 168, 172; greenwashing and 10–12, 41, 77–81; passive funds and 96, 97, 98; pensions and 39–40; ‘star’ 96; varying definitions of ESG 102, 103, 104 Gates, Bill 17, 18, 19, 52, 120, 126, 137 Generac 195 Generation Investment Management 2, 135 Georgetown University, Washington DC 45, 46, 51, 55–6, 60 Global Commission on the Economy and Climate 63 Global Reporting Initiative 190 Gogoro 128, 139 Goldman Sachs 1, 1n, 54, 77, 82, 107–8, 119, 137, 181, 189 Gore, Al 2, 135, 202 governance, good 8, 9, 40, 56, 61, 73, 88, 92, 98, 99, 103, 184, 195–6, 197 Government Pension Investment Fund of Japan 74, 93, 98, 180 green economy 33, 56, 203 greenhouse gas (GHG) emissions 109, 129, 141, 143, 148, 149, 150, 157–8, 160, 173, 187, 199 see also carbon emissions greenwashing 10, 12, 14, 20, 41, 77, 78, 88, 89, 90, 91, 96, 101, 104, 191, 192–3 Growing Underground 158–9 Hampshire College 46 Hampton Creek 146–7 H&M 62, 175 Harari, Yuval Noah 204 Harvard University 51–2, 67 hedge funds 4, 13, 14, 75–6, 80, 89 Hepburn, Cameron 72, 203 Hermes 83 high-voltage direct current (HVDC) 120–21 Higher Steaks 155–6 Hohn, Christopher 13–14, 80, 89 Howard, Andy 189–90 Howarth, Catherine 192–3 HSBC 88, 174, 175, 176 Hy2gen AG 138 hydrogen 113; aviation solutions 18, 142; batteries 138; blue 138; fuel cells 10, 138, 144, 154, 166; trucks/cars 15, 143 hydropower 131, 137 Hyundai 143 IKEA 160, 173 impact investment 43, 123 Impax Asset Management 77, 90, 157, 166, 176, 195 Impax Environmental Markets fund 90, 166, 172, 173, 175 Impossible Foods 15, 150, 152–3 Indigo 157 Ineos 78–9 ING 82 Ingka Group 160 InstaVolt 139–40 institutional investors 7, 9, 13, 18, 21, 31, 34, 67, 75, 76–7, 87–8, 94, 119, 122, 168, 191, 203 Institutional Investors Group on Climate Change (IIGCC) 76–7, 168, 203 Intergovernmental Panel on Climate Change (IPCC) 2, 5, 149, 160 internal combustion engine (ICE) vehicles 64, 130, 131, 182, 183–4 International Council on Clean Transportation (ICCT) 143 International Energy Agency (IEA) 111–12, 113, 115, 117, 129, 130, 164, 165, 168, 169, 170, 202 International Maritime Organization, The 143 International Monetary Fund (IMF) 56, 58, 187 Invesco Solar ETF 125 Ireland 46–7, 94, 125 Irena 110, 130, 132 iShares Global Clean Energy ETF 124–5 J.

Index The page references in this index correspond to the print edition from which this ebook was created, and clicking on them will take you to the location in the ebook where the equivalent print page would begin. To find a specific word or phrase from the index, please use the search feature of your ebook reader. AB InBev 176 active funds 30, 31, 41, 83, 96, 97, 98, 125 activist investors 69–77, 84–90, 100–101 advertising 77, 79, 80, 151, 202 AGMs (Annual General Meetings) 70–73, 84, 87, 104 agriculture 85, 120, 145–62; alternative food 22, 145–56; farming 22, 156–9; food waste 149, 159–61; greenhouse gas emissions 148–9, 150, 156–8, 159, 160; high-risk investors 162; low-risk investors 161; medium-risk investors 161–2; vegan diet/alternative meat 146, 149–56, 162 air conditioning 18, 38–9, 164, 170–71, 179, 194 alternative investment market (AIM), London 25, 31–2, 142 Amazon (online retailer) 19, 73–4, 157, 197 American Council for an Energy-Efficient Economy 165 ammonia, green 142–3 Amundi IS Equity Europe Low Carbon fund 63 Angel Academe 155 angel investing 37–9, 43, 155, 156, 160, 162 An Inconvenient Truth (film) 2 Anterra Capital 157, 160 apartheid, South Africa 3, 48, 51–2 Apple 33, 38–9, 91–2, 127 Applied Materials 167 Arctic, energy exploration in 66, 82 As You Sow 83, 104 asset classes see individual asset class name asset managers 11, 12, 58, 74, 88, 89, 90, 95, 119, 168 aviation 18, 22, 99, 129, 140–42, 167, 194, 199 AXA Investment Managers 77, 88, 95 Balk, Josh 146, 153–4 Ballard Power 138 Bank of America Merrill Lynch 6, 84 Bank of England 193 Barclays Bank 48, 73, 75, 182–3, 200 Barry, Michael 45, 46, 51, 55–6, 59, 60 batteries 15, 22, 113, 115–16, 128, 172; battery infrastructure 128; battery swapping 128, 139; charging 22, 113, 128, 130, 139–40, 203; green hydrogen 138; lithium-ion 115–16, 136, 137; role of 136–8 ‘best in class’ companies 7, 10, 92, 100, 134, 161–2, 176 Beyond Carbon 16 Beyond Meat 7, 15, 35, 36, 135, 150, 152–3, 154, 155, 162 Bezos Earth Fund 19 Biffa 174 billionaires, ‘green’ 14–17, 18, 19, 120, 124, 126 biofuels 22, 113, 140–43 biomass 110, 112 Bioy, Hortense 85, 197–8 Birol, Fatih 112, 202–3 BlackRock 14, 25, 26, 88, 89–90, 97, 199 Blood, David 1–2, 54, 135 Bloomberg 15, 104, 133 Bloomberg, Michael 16, 17, 19 Bloomberg New Energy Finance 136, 139 BMO European Equity (BMO Sustainable Opportunities) 11 BMO Responsible Global Equity fund 91–2 BMW 15, 129, 134, 137, 140, 143, 144 BNP Paribas 134, 161, 180, 181 BNY Mellon 177 Bollag, Benjamina 155–6 bonds 20, 26, 31, 32–4, 41, 44, 65, 66, 67; divestment and 65, 66, 67; green bonds 33, 42, 67, 83, 93–6, 195; transition bonds 67 Bond, Simon 67, 94 BP 4, 5, 9, 53, 76, 83, 99–100, 101, 102, 104, 108, 111, 114, 140, 188; net zero emissions by 2050 commitment 76, 79–80, 116, 186, 199; ‘Possibilities Everywhere’ ad campaign 79 Breakthrough Energy Ventures (BEV) 19, 52, 120, 121–2, 123, 124, 135, 137 Brin, Sergey 18 British American Tobacco (BAT) 54, 54n Brown Advisory Sustainable Growth Fund 197 Bruun, Michael 107, 108, 137 ‘Build Back Better’ slogan x, 201 Burger King 151–2, 153–4 Cambridge University 56–7, 65–7, 74–5; Institute for Sustainability Leadership 56–7 Canada Pension Plan Investment Board 137, 140 Candriam SRI Equity Climate Action fund 95, 165–6, 67 Capital Group 88 capital recycling 66, 67 Carbon Brief 198 carbon dioxide emissions 2, 7, 14, 16, 21, 22, 32, 33, 47, 53, 67, 83, 86, 87, 88, 89, 90, 95, 99, 102, 108–9, 168, 169, 180, 184, 191, 194, 202, 203; agriculture and 148–9, 150, 156–8, 159–60; carbon capture, use and storage (CCUS) 5, 117; carbon-offsets 5, 28, 63, 79, 150, 203; carbon price 187–90; coronavirus lockdown and 71, 109–10, 198, 199; disclosing 98, 103; divestment and 50–52; energy efficiency and 164, 165, 168–9, 172, 173, 175, 176, 177, 178; ‘net zero’ targets 5, 63, 71, 74, 76, 78, 79–80, 116, 126, 169, 176–8, 183, 186, 203; Paris Agreement (2015) and 4–5, 10, 42, 73, 74–5, 76, 78, 109–10, 111, 117, 132, 165, 188, 193; peak in 5, 111–12; scope 1 185–6; scope 2 185–6; scope 3 81, 175, 176, 185–7; transport and 129–34, 140–41, 142, 143 Carbon Tracker 53, 66, 180 Carney, Mark 190, 193–4 Cartier 11–12 CDP (formerly the Carbon Disclosure Project) 80–81, 86, 91, 153, 177, 178, 203 cell-based meat 155–6 Chargemaster 140 charging, battery 22, 113, 128, 130, 139–40, 203 charitable giving/philanthropy 5, 13, 14, 16, 19, 43, 123, 124 Chevron 116–17, 140 China 15, 61, 76, 114, 128–9, 131, 132, 164, 166, 170, 175 Church of England 74 circular economy 22, 163–79 cleantech crash (2007–8) 113–14, 171 Clearwater Fine Foods 142 ClientEarth 79 Climate Action 100+ initiative 76, 78, 83, 86, 105 Climate Bonds Initiative 94 Climate Group 86 Climate Leadership Council 188–9 climate solutions funds 6, 42, 125–6 coal 16, 21, 45, 46, 49, 52, 53, 67, 82, 87, 90, 109, 110–11, 112, 125, 183, 184, 187, 198 Columbia Threadneedle 67, 94 coronavirus pandemic ix–x, 22, 55, 64, 71, 90, 109–10, 112, 131, 132, 137, 138, 141, 151, 158, 168, 174, 175, 189, 196–8, 199–200, 201, 202, 203, 204 corporate bonds 32–3, 94 Cramer, Jim 61 Crop One Holdings 158–9 crowdfunding 43, 118, 119 CSM Energy 82–3 Curtis, Richard 40–41, 201 Deloitte 9, 191 Delta Airlines 79 Devon Energy Corp 194 diesel 183–4, 191 Dimensional Global Sustainable Core Equity 63 Dimon, Jamie 188 disruptive companies 52, 146, 153–4, 157, 171 dividends 31, 54, 54n, 55, 61, 68, 70, 80, 126, 144, 197 divestment 20–21, 22, 32, 45–68, 72, 82, 84, 85, 86, 92, 98, 104, 117, 185; capital recycling 66; economic case for 52–9; emissions reductions and 50–52; growth of movement 45–7; history of movement 47–50; how to invest after you divest 62–5; moral grounds 62; outside of equities 65–8; performance grounds 62; public shaming and 60–61 DNV GL 131, 136 Doerr, John 114 Dong Energy 107–8, 137 Draper Esprit 140 Drax 112 DS Smith 175 DWS 11, 77, 168 DyeCoo 173 early-stage investors 18, 38, 64, 121, 135, 140, 142, 148, 155, 179 EDF Energy 140 Edwards, Jenny 69–72, 73, 77, 84 electricity supply 112, 118, 120, 121, 125, 159, 169–70, 172, 185, 187, 194 electrification of transport 7, 10, 15, 29, 64, 73–4, 76, 113, 120, 127–44, 157, 163, 164, 194, 203; cars 7, 10, 15, 29, 64, 76, 103, 119, 129–30, 132–3, 134, 136, 157, 163, 164; mopeds 22, 127, 128 electrofuels 141 Ellen MacArthur Foundation 172 Emirates Flight Catering, Dubai 158 Energy Action Coalition 118 energy, investing in 11, 16, 35, 42, 80, 107–26, 138, 143, 157, 166, 167–8, 202–3; carbon dioxide emissions and 108–10; clean energy solutions 120–24; cleantech, new dawn for 115–20; cleantech crash (2007–8) 113–14, 171; entrepreneurs/Mosaic 118–20; high-risk investors 126; how to invest in clean energy 124–6; low-risk investors 126; medium-risk investors 126; primary energy consumption 111–12; renewable energy investment, history of 113–14; transitioning away from oil and gas/energy transition 19, 21, 39, 76, 84, 110–13, 123, 140, 194 energy efficiency, investing in 22, 33, 110, 161, 163–79, 183, 203; building and construction sectors 168–70; circular economy and 171–6; high-risk investors 178–9; low-risk investors 178; medium-risk investors 178; next-gen investors 170–71; semiconductor companies 143, 166–7, 178; weight reduction, investing in 167–8; zero emission pledges 176–8 engagement/effecting change 69–106; activist shareholders 69–74, 84–90; disclosure, improving 80–84; fund managers 73–4, 77–80; green bonds 93–6; greenwashing 77–80; passive investing 96–104; pension manager, putting pressure on your 90–93; professional fund managers and 75–7; retail investors/small investors 69–74, 84–90 ENI 117, 191 Environmental Recycling Technologies (ERT) 24–5 environmental score, ESG investing and 9, 10–11 see also ESG (environmental, social and governance) investing EO 139–40 equities 20, 26, 30–32, 33–4, 41, 44, 53, 64, 66, 68, 95, 195 ESG (environmental, social and governance) investing 61, 62, 66, 90, 95, 132–3, 147, 181, 182, 183, 184, 190, 191, 195; coronavirus and/future of 196–200; defined 8–12, 29–30, 44, 190, 195; ETFs 97; passive investor 99–104; pension funds and 92, 93; score and debt 82, 98 ETFs (exchange-traded funds) 30, 96–7, 100–1, 102, 124–5 European Investment Bank 94 European Union 103, 129, 130, 141, 169, 176, 183, 186, 191 ex-fossil fuel funds 42, 62, 63, 68, 85, 106 Extinction Rebellion 13 ExxonMobil 53, 61, 89, 116, 117, 188 family offices 18–19, 122–3, 142, 156, 182 Farmobile 157 fashion 28, 62, 175–6 Fidelity 103 financial advisers 12, 27, 29, 43, 44, 49, 95, 105, 182, 184 Financial Conduct Authority 192 financial crisis (2008) 1, 3–4, 17, 29, 114 Financial Stability Board 58 Fink, Larry 14, 90 Fluor 89 food see agriculture Food Freshness Technology 160 Ford Motors 177 fracking 79 FTSE 100 30, 31, 54, 55, 56, 103, 112, 175; Environmental Opportunities All Share index 56; Global All Cap index 56; TPI Climate Transition Index 74 fuel: aerodynamic systems and 39; alternative/biofuels 22, 53, 111, 113, 140–43; cells 10, 138, 142, 144, 154, 166; aviation and see aviation; fossil see individual fuel type fund managers 10, 11, 12, 43, 49, 60–61, 66–7, 89, 95, 97, 98, 105, 108, 143, 181; activist 13, 14, 30, 73–6, 83, 85, 86, 89, 91; energy efficiency and 166, 167, 168, 172; greenwashing and 10–12, 41, 77–81; passive funds and 96, 97, 98; pensions and 39–40; ‘star’ 96; varying definitions of ESG 102, 103, 104 Gates, Bill 17, 18, 19, 52, 120, 126, 137 Generac 195 Generation Investment Management 2, 135 Georgetown University, Washington DC 45, 46, 51, 55–6, 60 Global Commission on the Economy and Climate 63 Global Reporting Initiative 190 Gogoro 128, 139 Goldman Sachs 1, 1n, 54, 77, 82, 107–8, 119, 137, 181, 189 Gore, Al 2, 135, 202 governance, good 8, 9, 40, 56, 61, 73, 88, 92, 98, 99, 103, 184, 195–6, 197 Government Pension Investment Fund of Japan 74, 93, 98, 180 green economy 33, 56, 203 greenhouse gas (GHG) emissions 109, 129, 141, 143, 148, 149, 150, 157–8, 160, 173, 187, 199 see also carbon emissions greenwashing 10, 12, 14, 20, 41, 77, 78, 88, 89, 90, 91, 96, 101, 104, 191, 192–3 Growing Underground 158–9 Hampshire College 46 Hampton Creek 146–7 H&M 62, 175 Harari, Yuval Noah 204 Harvard University 51–2, 67 hedge funds 4, 13, 14, 75–6, 80, 89 Hepburn, Cameron 72, 203 Hermes 83 high-voltage direct current (HVDC) 120–21 Higher Steaks 155–6 Hohn, Christopher 13–14, 80, 89 Howard, Andy 189–90 Howarth, Catherine 192–3 HSBC 88, 174, 175, 176 Hy2gen AG 138 hydrogen 113; aviation solutions 18, 142; batteries 138; blue 138; fuel cells 10, 138, 144, 154, 166; trucks/cars 15, 143 hydropower 131, 137 Hyundai 143 IKEA 160, 173 impact investment 43, 123 Impax Asset Management 77, 90, 157, 166, 176, 195 Impax Environmental Markets fund 90, 166, 172, 173, 175 Impossible Foods 15, 150, 152–3 Indigo 157 Ineos 78–9 ING 82 Ingka Group 160 InstaVolt 139–40 institutional investors 7, 9, 13, 18, 21, 31, 34, 67, 75, 76–7, 87–8, 94, 119, 122, 168, 191, 203 Institutional Investors Group on Climate Change (IIGCC) 76–7, 168, 203 Intergovernmental Panel on Climate Change (IPCC) 2, 5, 149, 160 internal combustion engine (ICE) vehicles 64, 130, 131, 182, 183–4 International Council on Clean Transportation (ICCT) 143 International Energy Agency (IEA) 111–12, 113, 115, 117, 129, 130, 164, 165, 168, 169, 170, 202 International Maritime Organization, The 143 International Monetary Fund (IMF) 56, 58, 187 Invesco Solar ETF 125 Ireland 46–7, 94, 125 Irena 110, 130, 132 iShares Global Clean Energy ETF 124–5 J.


pages: 324 words: 92,805

The Impulse Society: America in the Age of Instant Gratification by Paul Roberts

"Friedman doctrine" OR "shareholder theory", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Abraham Maslow, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Alan Greenspan, American Society of Civil Engineers: Report Card, AOL-Time Warner, asset allocation, business cycle, business process, carbon tax, Carl Icahn, Cass Sunstein, centre right, choice architecture, classic study, collateralized debt obligation, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, David Brooks, delayed gratification, disruptive innovation, double helix, Evgeny Morozov, factory automation, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, full employment, game design, Glass-Steagall Act, greed is good, If something cannot go on forever, it will stop - Herbert Stein's Law, impulse control, income inequality, inflation targeting, insecure affluence, invisible hand, It's morning again in America, job automation, John Markoff, Joseph Schumpeter, junk bonds, knowledge worker, late fees, Long Term Capital Management, loss aversion, low interest rates, low skilled workers, mass immigration, Michael Shellenberger, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, stock buybacks, technological determinism, technological solutionism, technoutopianism, Ted Nordhaus, the built environment, the long tail, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen, Tyler Cowen: Great Stagnation, value engineering, Walter Mischel, winner-take-all economy

Telling the Market to Back Off For decades, conservatives complained that government was so deeply embedded in the economy, and had so much influence on the decisions of producers and consumers alike, that prosperity was no longer possible. Today, we can make a similar complaint about the financial markets, whose penetration into every part of our economic lives lies at the heart of the Impulse Society. In everything from the expansion of consumer credit to the rise of “activist” shareholders, the financial sector has gradually injected its requirements for high yields, quick returns, and capital efficiency into all walks of commercial life—and much of the rest of society as well. Financialization’s most infamous symptom is the overuse of consumer credit, and, clearly, we could strike a serious blow against the Impulse Society by helping consumers to rethink the practice of gratifying the present by borrowing from the future.

Since the shareholder revolution of the 1980s, not only have corporate managers become more eager to please financial markets—fully two-thirds of the average senior executive’s compensation is now in stocks and options7—but those markets are much harder to satisfy. The stock market today is ruled by so-called institutional investors—pensions, mutual funds, hedge funds, and, especially, hedge fund “activists”—investors who buy up large stakes in companies and then seek to influence share price. For these big institutional players, which collectively control around three-quarters of the shares of big, publicly traded companies,8 the hunt for yield is life’s overriding goal. To prosper—indeed, to survive—the institutional investors must please their own clients (everyone from retirees to billionaires), and this they do by setting aggressive quarterly “return targets” for their portfolios—targets that, as economists Eric Tymoigne and Randall Wray have pointed out, are generally well above the growth rates projected for the American economy as a whole.

In a truly efficient market, such short-termism would be recognized and punished. But in the self-centered economy, the market is in on the scam. Thus, shareholders cheer when Microsoft or Apple or Intel spends tens of billions of dollars on share buybacks. Consider the following: in August 2013, Carl Icahn, the corporate-raider-turned-activist-investor, announced (on Twitter, naturally) that he had acquired a $1 billion stake in Apple, and was demanding that the company spend $150 billion to buy back its own shares. Such a move, Icahn insisted, would lift Apple’s share price from $487 to $625 (and, others noted, net the raider a $280 million capital gain48).


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, Alan Greenspan, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, Bear Stearns, behavioural economics, Big Tech, bonus culture, Bretton Woods, British Empire, business cycle, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, data science, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, electricity market, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial intermediation, Ford Model T, Frederick Winslow Taylor, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Greenspan put, guns versus butter model, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Bogle, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, London Whale, Long Term Capital Management, low interest rates, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, proprietary trading, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Ronald Reagan, Satyajit Das, Savings and loan crisis, scientific management, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, TED Talk, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, Tragedy of the Commons, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, vertical integration, zero-sum game

Meanwhile, the company’s R&D as a percentage of sales, which has been falling since 2001, is creeping ever lower.5 What these sorts of sugar highs portend for Apple’s long-term future is anyone’s guess, but one thing is clear: the business of America isn’t business anymore. It’s finance. From “activist investors” to investment banks, from management consultants to asset managers, from high-frequency traders to insurance companies, today, financiers dictate terms to American business, rather than the other way around. Wealth creation within the financial markets has become an end in itself, rather than a means to the end of shared economic prosperity.

(Mayer later found herself under pressure from yet more “activists” looking to dissuade her from using a cash hoard from the proposed spin-off of Yahoo’s core search business for acquisitions rather than buybacks.32) She’s certainly not alone. The year 2015 set a new record for buybacks and dividend payments, as well as demands for even greater payouts issued by activist investors like Loeb, Icahn, Einhorn, and many others.33 What’s more, though many of us don’t know it, we ourselves are part of a dysfunctional ecosystem that fuels all this short-term thinking. The people who manage our retirement money—fund managers working for firms like Fidelity and BlackRock—are typically compensated for delivering returns over a year or less.34 That means they use their financial clout (which is really ours) to push companies to produce quick-hit results, rather than to execute longer-term strategies.

Chapter 2 will examine how financial thinking came to dominate American corporate life by telling the story of General Motors and of former secretary of defense Robert McNamara and the Whiz Kids, whose obsession with numbers decisively contributed to the loss of the Vietnam War, the decline of the American auto industry, and the ultimate spread of financialized thinking into every corner of American business today. Chapter 3 will delve deeply into the history of US business education and examine how and why it came to focus on balance sheet manipulation to the exclusion of real managerial skills. Chapter 4 will deconstruct our conventional wisdom around shareholder value by looking at how activist investors like Carl Icahn now call the shots at the country’s largest and most successful firms—such as Apple—at the expense of innovation and job creation. Chapter 5 will show how much of corporate America has come to emulate banking—how we’re all glorified bankers now—by tracking the history of General Electric, which is one of the great American innovators, but which became the country’s fifth-largest bank before trying to reclaim its roots in industry.


pages: 344 words: 104,522

Woke, Inc: Inside Corporate America's Social Justice Scam by Vivek Ramaswamy

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2021 United States Capitol attack, activist fund / activist shareholder / activist investor, affirmative action, Airbnb, Amazon Web Services, An Inconvenient Truth, anti-bias training, Bernie Sanders, Big Tech, BIPOC, Black Lives Matter, carbon footprint, clean tech, cloud computing, contact tracing, coronavirus, corporate governance, corporate social responsibility, COVID-19, critical race theory, crony capitalism, cryptocurrency, defund the police, deplatforming, desegregation, disinformation, don't be evil, Donald Trump, en.wikipedia.org, Eugene Fama: efficient market hypothesis, fudge factor, full employment, George Floyd, glass ceiling, global pandemic, green new deal, hiring and firing, Hyperloop, impact investing, independent contractor, index fund, Jeff Bezos, lockdown, Marc Benioff, Mark Zuckerberg, microaggression, military-industrial complex, Network effects, Parler "social media", plant based meat, Ponzi scheme, profit maximization, random walk, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robinhood: mobile stock trading app, Ronald Reagan, Salesforce, self-driving car, shareholder value, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, single source of truth, Snapchat, social distancing, Social Responsibility of Business Is to Increase Its Profits, source of truth, sovereign wealth fund, Susan Wojcicki, the scientific method, Tim Cook: Apple, too big to fail, trade route, transcontinental railway, traveling salesman, trickle-down economics, Vanguard fund, Virgin Galactic, WeWork, zero-sum game

But if BlackRock uses the corporate shield to implement its own vision of “social responsibility” for society by using its portfolio companies as a vehicle for advancing that agenda, then aggrieved consumers, employees, and other stakeholders shouldn’t just be limited to suing those corporations. They should be able to go after BlackRock directly—as well as any other social-activist shareholder of that corporation. Let’s get specific: suppose there’s a big parade organized by a bunch of social activists around a particular cause—say, climate change. Right now, if a regular social activist drives a car in that parade and crashes into someone, she faces personal tort liability. She could be sued in court and lose everything she has.

For those like me who believe the rise of Wokenomics represents a problem for democracy, the simple answer is to limit the scope of limited liability of the corporation to cover only the set of activities it was intended to cover. A corporation ought to be free to pursue activities that go beyond the pursuit of profit—America is a free country, after all—but to the extent that it does, its social-activist shareholders shouldn’t receive any special protection from direct liability. There is no government regulatory action needed here. Just a simple legal fix—arguably a form of deregulation—that clarifies that the construct of limited liability is… well, limited. I KEPT MY promise to my employees to engage in a day of reflection on Juneteenth.

That’s distinct from the phenomenon of woke investors, who demand that otherwise humdrum CEOs use their companies to advance certain pet social causes favored by the investors themselves. This isn’t the agent betraying the interests of the principal, but the principal (a shareholder) demanding exactly what the agent (the CEO) should do. Effectively, this is what ESG investing is all about. But it’s not just ESG investors who play this game. Sometimes these activist investors include sovereign nations and autocratic dictatorships like China who have their own ideas about what causes to advance. Woke executives and woke investors raise distinct problems that I address later in the book, but at core they’re both examples of this form of paternalism. In both cases, it’s about business elites telling ordinary Americans what they’re supposed to do and how they’re supposed to think.


pages: 318 words: 77,223

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed A. El-Erian

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, break the buck, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, collapse of Lehman Brothers, corporate governance, currency peg, disruptive innovation, driverless car, Erik Brynjolfsson, eurozone crisis, fear index, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, friendly fire, full employment, future of work, geopolitical risk, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, inflation targeting, Jeff Bezos, Kenneth Rogoff, Khan Academy, liquidity trap, low interest rates, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, Norman Mailer, oil shale / tar sands, price stability, principal–agent problem, quantitative easing, risk tolerance, risk-adjusted returns, risk/return, Second Machine Age, secular stagnation, sharing economy, Sheryl Sandberg, sovereign wealth fund, The Great Moderation, The Wisdom of Crowds, too big to fail, University of East Anglia, yield curve, zero-sum game

Quoting the S&P estimate of more than $900 billion in U.S. dividends and buybacks for 2014, the letter acknowledges that companies face a “business ecosystem [that] has evolved significantly and presents a daunting challenge for companies working to resist short-term market pressures”—this at a time when S&P expected further increases in both dividends and buybacks. Specifically, dividends were projected to maintain their double-digit growth of the last four years, with a similar growth rate for buybacks.3 Larry Fink correctly noted that pressures on companies come from many directions, including “the proliferation of activist shareholders seeking immediate returns, the ever increasing velocity of capital, a media landscape defined by the 24/7 news cycle and a shrinking attention span, and public policy that fails to encourage truly long-term investment.” Notwithstanding this rather daunting list, Larry Fink urges corporate leaders to reverse the resulting “underinvesting in innovation, skilled workforces or essential capital expenditures necessary to sustain long-term growth.”

In the real world, however, it has taken an unusually long time since the financial crisis for such activity to ramp up, and when activity did pick up, the moves being made initially were largely defensive—that is, companies sought to consolidate costs and reduce competition rather than expand aggressively. Coming out of the financial crisis, companies opted to retain earnings and build up a cash cushion, minimizing the chance of being traumatized again by the market grinding to a halt. But with the growing reality of activist investors—that is, financial investors that use various instruments to place considerable pressure on managements and boards to change—it became only a matter of time until money started flowing back to shareholders through share buybacks and higher dividend payments. While in some cases this resulted in better outcomes, in others it forced companies to manage more intensively to short-term pressures rather than longer-term business interests.


pages: 716 words: 192,143

The Enlightened Capitalists by James O'Toole

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, activist fund / activist shareholder / activist investor, anti-communist, Ayatollah Khomeini, benefit corporation, Bernie Madoff, Bletchley Park, book value, British Empire, business cycle, business logic, business process, California gold rush, carbon footprint, City Beautiful movement, collective bargaining, company town, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, desegregation, do well by doing good, Donald Trump, double entry bookkeeping, end world poverty, equal pay for equal work, Frederick Winslow Taylor, full employment, garden city movement, germ theory of disease, glass ceiling, God and Mammon, greed is good, high-speed rail, hiring and firing, income inequality, indoor plumbing, inventory management, invisible hand, James Hargreaves, job satisfaction, joint-stock company, Kickstarter, knowledge worker, Lao Tzu, Larry Ellison, longitudinal study, Louis Pasteur, Lyft, Marc Benioff, means of production, Menlo Park, North Sea oil, passive investing, Ponzi scheme, profit maximization, profit motive, Ralph Waldo Emerson, rolodex, Ronald Reagan, Salesforce, scientific management, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Socratic dialogue, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, stock buybacks, stocks for the long run, stocks for the long term, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Tim Cook: Apple, traveling salesman, Uber and Lyft, uber lyft, union organizing, Vanguard fund, white flight, women in the workforce, young professional

As explained in chapter 18, twenty-seven American states grant benefit corporation charters that allow companies to be legally structured so that their officers and directors are permitted to make decisions benefiting society, even if those actions are not in the immediate interest of shareholders. Thus, at least theoretically, benefit status shields socially engaged companies from the threat of activist shareholder suits based on the doctrine of shareholder primacy. It is testament to Chouinard’s deep commitment to social and environmental causes—and, equally, his distrust of investors—that he filed for benefit status. After all, it was completely unnecessary for him to have done so, given that Patagonia has no shareholders!

Many companies that have pledged to become carbon neutral, to use only recycled and recyclable materials, and to source only fair-traded commodities have discovered after years of trying to meet those goals that they are still decades away from doing so. More significantly, a number of companies committed to social engagement have come under attack by activist investors claiming that such efforts reduce the profits belonging to them, the legal owners of those corporations.26 Indeed, a leitmotif running through all the enlightened capitalists’ stories is conflict over the control of company ownership. That is because, in capitalist systems, those who control a corporation’s stock have the final say in setting its policy.

What is significant is that it has happened at the global corporation most committed to a patient, long-term plan to implement enlightened practices.7 About the time Unilever was under threat of a hostile takeover in Britain, America’s Whole Foods Corporation faced a similar challenge from activist investors dissatisfied with its rate of financial return. Like Unilever, Whole Foods was known for its stakeholder-oriented and environmentally sensitive practices. Again, like Unilever, it was profitable—but not profitable enough for the activist investment firms holding large blocks of the company’s stock.


pages: 423 words: 118,002

The Boom: How Fracking Ignited the American Energy Revolution and Changed the World by Russell Gold

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, activist lawyer, addicted to oil, Alan Greenspan, American energy revolution, Bakken shale, Bernie Sanders, Buckminster Fuller, California energy crisis, Carl Icahn, clean water, corporate governance, corporate raider, cotton gin, electricity market, energy security, energy transition, financial engineering, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), man camp, margin call, market fundamentalism, Mason jar, North Sea oil, off-the-grid, oil shale / tar sands, oil shock, peak oil, precautionary principle, Project Plowshare, risk tolerance, rolling blackouts, Ronald Reagan, seminal paper, shareholder value, Silicon Valley, Upton Sinclair

I would not be allowed to grab lunch at one of the company’s three on-site restaurants, which a video screen advertised were serving pan-seared Pacific red snapper in a blood-orange beurre blanc sauce with roasted Japanese eggplant. McClendon was under siege, his leadership and personal finances attacked by activist shareholders. They believed that the assets he had built, leases to drill on millions of acres above US shales and trillions of cubic feet of natural gas, were worth more in the hands of someone else. He had relentlessly—and, some argued, recklessly—created the preeminent shale energy company in the world.

At the end of his short remarks, he mentioned the public drubbing his handpicked board members had just received, saying, “We will be studying the results of the vote today and see what else needs to be done.” After he spoke, Vincent Intrieri took the microphone. He worked for Carl Icahn, a well-known activist investor with a reputation for acquiring shares in a company and forcing change. Icahn had been buying Chesapeake shares for several weeks. Intrieri was in his midfifties. He wore an expensive suit and eyeglasses, the uniform of a powerful capitalist. “We believe Aubrey that you are a great oil and gas man,” he said, “but even great leaders need oversight.”


pages: 253 words: 79,214

The Money Machine: How the City Works by Philip Coggan

activist fund / activist shareholder / activist investor, algorithmic trading, asset-backed security, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, bond market vigilante , bonus culture, Bretton Woods, call centre, capital controls, carried interest, central bank independence, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, disintermediation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, endowment effect, financial deregulation, financial independence, floating exchange rates, foreign exchange controls, Glass-Steagall Act, guns versus butter model, Hyman Minsky, index fund, intangible asset, interest rate swap, inverted yield curve, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", joint-stock company, junk bonds, labour market flexibility, large denomination, London Interbank Offered Rate, Long Term Capital Management, low interest rates, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, negative equity, Nick Leeson, Northern Rock, pattern recognition, proprietary trading, purchasing power parity, quantitative easing, reserve currency, Right to Buy, Ronald Reagan, shareholder value, South Sea Bubble, sovereign wealth fund, technology bubble, time value of money, too big to fail, tulip mania, Washington Consensus, yield curve, zero-coupon bond

Conspiracy theorists can follow the chain of ownership back and back without finding a sinister, top-hatted capitalist at the end of it (although when it comes to hedge funds and private equity, it may be a different matter). Some people, particularly company executives, worry that investment institutions will gang together and try to alter the policies of the companies in which they have substantial holdings. This is happening more than it used to, with so-called activist investors often demanding that companies take action to create ‘shareholder value’ and other ethical investors demanding that companies respect the rights of workers in developing countries, adopt sound environmental policies and so on. In the majority of cases, however, institutions do not exercise their power to intervene in the day-to-day running of firms.

The managers regard themselves as smart people, pitting themselves in daily combat against the whims of the markets. They resent criticism and dislike publicity about their pay packages or their mistakes. But they are not above using the press to promote their positions, particularly in bid situations. This can lead to a lot of resentment, especially when so-called activist funds start to lobby against the decisions of company managers. The Children’s Investment fund, or TCI, is one prominent example. It campaigned against the Deutsche Börse’s bid for the London Stock Exchange, arguing that the German exchange would do better to return cash to shareholders. Not only did the bid fail but the Börse’s chief executive Weiner Seifert was forced out.

The final count can be agonizingly close – bids have been disallowed because the vital acceptances were delivered just a few minutes after the final deadline. These days hedge funds may often be involved. Some may follow a strategy known as merger arbitrage in which they buy the shares of the target and sell short (bet on a decline in) the shares of the predator. Others may be activist funds that buy stakes and try to force a company’s managers to increase the share price by seeking a bid. Takeovers tend to be terribly acrimonious, although the kind of high-profile advertising that characterized the takeover battles of the early 1980s has been discouraged. They are also very lucrative for the banks, lawyers, accountants and public relations advisers involved.


Deep Value by Tobias E. Carlisle

activist fund / activist shareholder / activist investor, Andrei Shleifer, availability heuristic, backtesting, behavioural economics, book value, business cycle, buy and hold, Carl Icahn, corporate governance, corporate raider, creative destruction, Daniel Kahneman / Amos Tversky, discounted cash flows, financial engineering, fixed income, Henry Singleton, intangible asset, John Bogle, joint-stock company, low interest rates, margin call, passive investing, principal–agent problem, Richard Thaler, risk free rate, riskless arbitrage, Robert Shiller, Rory Sutherland, shareholder value, Sharpe ratio, South Sea Bubble, statistical model, Teledyne, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Tim Cook: Apple

Shareholder activists may pursue a multitude of agendas, not necessarily seeking to improve intrinsic value or remove a market price discount, but activist investors seek only to deliver a return. The difference between activist investing and other forms of shareholder activism is the difference between whaling and whaling on the Pequod. The mandate is whales—deep undervaluation—not white whales—shareholder activism. This leads activist investors to seek different ends to other shareholder activists. Activist investors pressure boards to remove underperforming managers, stop value-destroying mergers and acquisitions, disgorge excess cash and optimize capital structures, or press for a sale of the company, all of which are designed only to improve shareholder value.

For a brief period, news of their exploits would extend beyond the business pages and into popular culture, most notably in Michael Douglas’s character Gordon Gecko in Wall Street (1987), Richard Gere’s Edward Lewis in Pretty Woman (1990), and Danny Devito’s Larry “The Liquidator” Garfield in Other People’s Money (1991), notable for a memorable scene in which DeVito draws Graham’s net current asset value formula on a blackboard. Their influence waxed and waned with the ­market. Following the 1987 stock market crash, they gradually retreated again from the public consciousness. A new breed of activist investors emerged in the wake of the dot-com bust in the early 2000s, chasing the cashed-up failures of the information technology and communications boom. As Evans and Icahn had before them, the new activist investors rediscovered the power of the public media campaign, the proxy contest, and the tender offer. The new activists moved in some cases to civilize shareholder activism, allowing institutionalization that attracted new capital, and rendered countless new innovations, from web-based campaigns and “public” private equity.

Boyson and Mooradian also found similar results, indicating that activists significantly improve both the short-term and long-term performance of targeted firms.65 These performance improvements included reductions in cash holdings, which is further evidence that activists reduce the agency costs associated with free cash flows. The research is clear that activist investors, particularly those who pursue aggressive, well-defined objectives, improve both the short-term market and longer-term operating performance of the companies they target.66 In the process, they deliver strong returns for their own investors, in comparison to returns for less-aggressive activist investors and for comparable passive investors. While the filing of a schedule 13D notice heralds short-term market How Hannibal Profits From His Victories 183 performance, the discipline applied by an engaged investor—improving corporate governance and reducing agency costs—leads to better long-term operating performance too.


pages: 263 words: 80,594

Stolen: How to Save the World From Financialisation by Grace Blakeley

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, basic income, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Big Tech, bitcoin, bond market vigilante , Bretton Woods, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, cryptocurrency, currency peg, David Graeber, debt deflation, decarbonisation, democratizing finance, Donald Trump, emotional labour, eurozone crisis, Extinction Rebellion, extractivism, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, full employment, G4S, gender pay gap, gig economy, Gini coefficient, global reserve currency, global supply chain, green new deal, Greenspan put, housing crisis, Hyman Minsky, impact investing, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Jeremy Corbyn, job polarisation, junk bonds, Kenneth Rogoff, Kickstarter, land value tax, light touch regulation, low interest rates, low skilled workers, market clearing, means of production, Modern Monetary Theory, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, paradox of thrift, payday loans, pensions crisis, Phillips curve, Ponzi scheme, Post-Keynesian economics, post-war consensus, price mechanism, principal–agent problem, profit motive, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Right to Buy, rising living standards, risk-adjusted returns, road to serfdom, Robert Solow, savings glut, secular stagnation, shareholder value, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, the built environment, The Great Moderation, too big to fail, transfer pricing, universal basic income, Winter of Discontent, working-age population, yield curve, zero-sum game

Building the Future Chapter One The Golden Age of Capitalism How Does Change Happen? The Rise of Global Finance The Political Consequences of Social Democracy Never Let a Serious Crisis Go to Waste Chapter Two Vulture Capitalism: The Financialisation of the Corporation The Big Bang Corporate Raiders, Hostile Takeovers and Activist Investors From Downsize and Distribute to Merge and Monopolise Chapter Three Let Them Eat Houses: The Financialisation of the Household The Enemy Within Privatised Keynesianism Blowing Bubbles Financialisation and Politics Chapter Four Thatcher’s Greatest Achievement: The Financialisation of the State Thatcher’s Greatest Achievement PFI: Profits for Investors The Bond Vigilantes Illiberal Technocracy Chapter Five The Crash Bubble Economics Financial Globalisation Securitisation, Shadow Banking and Inter-Bank Lending Bailout Britain Transatlantic Banking Crisis or Structural Crisis of Financial Capitalism?

The rise of the institutional investor and shareholder value ideology have had a lasting impact on corporate power in both the US and the UK.7 Most corporations are now structured around the interests of shareholders, with workers’ interests coming last, if they are even considered at all.8 As this process has developed, a battle has emerged between certain types of shareholders over others. Short-term shareholders, like hedge funds, have benefitted to a much greater extent than long-term shareholders, like pension funds.9 Some private executives, intent on maintaining their corporations’ size and power, have sought to protect themselves from hostile takeovers and activist investors. Those that have succeeded have emerged as the most powerful monopolies in human history. Meanwhile, any form of resistance to the emergence of this model has been brutally broken. Where unions may once have acted in the interests of workers against managers acting in the interests of shareholders, the former have been eviscerated by states intent on ensuring that businesses are able to make as much money as possible.

These pressures have been passed on to corporations via the stock market: with equities representing a significant chunk of the assets held by money managers, the pressure on corporations to meet shareholder needs for immediate returns increased.33 In some cases, rather than being responsible to a board of directors and a few disorganised shareholders, corporations have been held to ransom by “activist investors” demanding that their capital is used in the most efficient way possible. This change in corporate governance has also been reinforced and embedded by the emergence of a new ideology: shareholder value. Together, the increasing power of investors and the emergence of an ideology to support this power has led to the financialisation of the non-financial corporation: businesses are increasingly being used as piggy banks for rich shareholders.


pages: 198 words: 53,264

Big Mistakes: The Best Investors and Their Worst Investments by Michael Batnick

activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, AOL-Time Warner, asset allocation, Bear Stearns, behavioural economics, bitcoin, Bretton Woods, buy and hold, buy low sell high, Carl Icahn, cognitive bias, cognitive dissonance, Credit Default Swap, cryptocurrency, Daniel Kahneman / Amos Tversky, endowment effect, financial engineering, financial innovation, fixed income, global macro, hindsight bias, index fund, initial coin offering, invention of the wheel, Isaac Newton, Jim Simons, John Bogle, John Meriwether, Kickstarter, Long Term Capital Management, loss aversion, low interest rates, Market Wizards by Jack D. Schwager, mega-rich, merger arbitrage, multilevel marketing, Myron Scholes, Paul Samuelson, Pershing Square Capital Management, quantitative easing, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, Robert Shiller, short squeeze, Snapchat, Stephen Hawking, Steve Jobs, Steve Wozniak, stocks for the long run, subprime mortgage crisis, transcontinental railway, two and twenty, value at risk, Vanguard fund, Y Combinator

Gone were the days of buying a company at a discount, and letting the chips fall where they may. Bill Ackman rose from the ashes of Gotham Partners like a phoenix and came out one of the most aggressive activist investors of his era. An activist investor is one who acquires a large enough shares in a company to enact changes. They'll try to persuade management to be more shareholder friendly, which is code for increase the stock price. If they're not successful, they can push for a seat on the board and enact changes from the inside. Activist investors are a confident bunch. It's one thing to purchase shares in a company, it's another thing entirely to impose your will on a management team and tell them how to run their business.

Ackman has done with this once‐obscure holding company, whose main subsidiary, MBIA Insurance, is the nation's largest bond insurer.10 After seven years, Ackman would ultimately be vindicated, and he walked away with $1.4 billion in profits.11 But his battle with MBIA was a warm‐up for the war he would have with Herbalife. By definition, activist investors are public, because once you acquire 5% of a company, you must file a 13D registration with the Security and Exchange Commission. Short positions, however, do not have to be disclosed, but Ackman chooses to do so anyway, like nobody has ever done before. Herbalife is a Los Angeles–based company that sells weight loss products and nutritional supplements.

Loeb wrote a letter to his investors saying that the majority of his stake was purchased “during the panicked selling that followed the short seller's dramatic claims.”18 In the five days since Loeb's filing, Herbalife's stock rose 20%. Then a week later, the Wall Street Journal reported that billionaire activist investor Carl Icahn took a stake in Herbalife, and a month later, disclosures showed he owned 12.98% of the company. Carl Icahn and Dan Loeb against Bill Ackman – a face‐off raging all because Ackman got on his soapbox. It's impossible to know for sure whether Loeb and Icahn actually thought Herbalife was a good business and its stock was undervalued.


pages: 120 words: 33,892

The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market by Tobias E. Carlisle

activist fund / activist shareholder / activist investor, book value, business cycle, Carl Icahn, cognitive dissonance, corporate governance, corporate raider, Jeff Bezos, Mark Spitznagel, Market Wizards by Jack D. Schwager, Paul Graham, Peter Thiel, Richard Thaler, shareholder value, stock buybacks, tail risk, Tim Cook: Apple

ACKNOWLEDGMENTS I am grateful to the early reviewers of this book, notably Johnny Hopkins, Colin Macintosh, Jacob Taylor and Lonnie Rush at Farnam Street Investments, and Michael Seckler and John Alberg at Euclidean Technologies. ABOUT THE AUTHOR Tobias Carlisle is the founder and managing director of Carbon Beach Asset Management, LLC. He serves as co-portfolio manager of Carbon Beach’s managed accounts and funds. He is the author of the bestselling book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance). He is a coauthor of Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016, Wiley Finance) and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance).

He attacked the giants of the public markets, which included Texaco, the “Big Red Star of the American Highway,” for which he bid $12.4 billion. He also attacked U.S. Steel, the world’s first billion-dollar corporation, then with a market cap of $6 billion. Other investors took notice. A cottage industry of so-called corporate raiders sprang up. They disappeared with the 1987 stock market crash. But a new breed of activist investors emerged in the wake of the dot-com bust in the early 2000s. We’ll learn about two in the next chapter. 10. NEW GENTLEMEN OF FORTUNE “It seemed a very great world in which these men lived; a world where high rules reigned and every trifle in public conduct counted: a duelling-ground where although the business might be ruthless, and the weapons loaded with ball, there was ceremonious personal courtesy and mutual respect

Deep discounts and good returns go together. For most industrial companies, the Acquirer’s Multiple is the best single measure of undervaluation. The Acquirer’s Multiple is a company’s enterprise value compared to its operating earnings. It is the metric private equity firms use when buying companies whole and activist investors use when seeking hidden value. The enterprise value is the true price we must pay for a company. It includes the market cap, which is the share price multiplied by the number of shares on issue. The market cap alone can mislead because it ignores other costs borne by the owner. The enterprise value also examines the balance-sheet and off-balance-sheet items.


file:///C:/Documents%20and%... by vpavan

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Alan Greenspan, AOL-Time Warner, asset allocation, Bear Stearns, Berlin Wall, book value, business cycle, buttonwood tree, buy and hold, Carl Icahn, corporate governance, corporate raider, currency risk, disintermediation, diversification, diversified portfolio, Donald Trump, estate planning, financial engineering, fixed income, index fund, intangible asset, interest rate swap, John Bogle, junk bonds, Larry Ellison, margin call, Mary Meeker, money market fund, Myron Scholes, new economy, payment for order flow, price discovery process, profit motive, risk tolerance, shareholder value, short selling, Silicon Valley, Small Order Execution System, Steve Jobs, stocks for the long run, stocks for the long term, tech worker, technology bubble, transaction costs, Vanguard fund, women in the workforce, zero-coupon bond, éminence grise

Unfortunately, removing unacceptable directors from a board isn't easy. Large shareholders, such as pension and mutual funds, tend to vote with management unless the company's share price has plummeted. Boards of directors also are often presented as one slate; you vote for all or none. But as activist shareholder groups and the financial media frown on this practice as a management-protection ploy, companies increasingly are putting individual directors up for annual reelection by shareholders. Why Should You Care? I believe a company's corporate governance is one of the most important factors to consider before investing in a company.

The corporate raider movement caused governance experts to look for better ways to improve corporate performance, but with far less turmoil. Goldschmid and others focused on forcing directors to switch their allegiance from management to shareholders. And that gave rise to a new and powerful special interest group: activist shareholders. Institutional pension funds began to use their considerable leverage to pressure companies to get rid of poison pills and take other steps to improve performance. Among the most active were TIAA-CREF (the country's largest private pension fund, formally called the Teachers Insurance and Annuity Association-College Retirement Equities Fund) and CalPERS (the nation's largest public pension fund).


pages: 489 words: 106,008

Risk: A User's Guide by Stanley McChrystal, Anna Butrico

"Hurricane Katrina" Superdome, Abraham Maslow, activist fund / activist shareholder / activist investor, airport security, Albert Einstein, Apollo 13, banking crisis, Bernie Madoff, Boeing 737 MAX, business process, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, computer vision, coronavirus, corporate governance, cotton gin, COVID-19, cuban missile crisis, deep learning, disinformation, don't be evil, Dr. Strangelove, fake news, fear of failure, George Floyd, Glass-Steagall Act, global pandemic, Googley, Greta Thunberg, hindsight bias, inflight wifi, invisible hand, iterative process, late fees, lockdown, Paul Buchheit, Ponzi scheme, QWERTY keyboard, ride hailing / ride sharing, Ronald Reagan, San Francisco homelessness, School Strike for Climate, Scientific racism, Silicon Valley, Silicon Valley startup, Skype, social distancing, source of truth, Stanislav Petrov, Steve Jobs, Thomas L Friedman, too big to fail, Travis Kalanick, wikimedia commons, work culture

Though his look lasted: Randolph, That Will Never Work, chap. 16. Blockbuster claimed that e-commerce: Randolph, That Will Never Work, chap. 16. Wasn’t movie renting: John Antioco, “How I Did It: Blockbuster’s Former CEO on Sparring with an Activist Shareholder,” Harvard Business Review, April 2011, https://hbr.org/2011/04/how-i-did-it-blockbusters-former-ceo-on-sparring-with-an-activist-shareholder. Blockbuster felt streaming: Keating, Netflixed, chap. 4. conducted by Kagan Research: Keating, Netflixed, chap. 4. current 100 million renters: Keating, Netflixed, chap. 4. own in-store subscription model: Keating, Netflixed, chap. 4.


pages: 477 words: 144,329

How Money Became Dangerous by Christopher Varelas

activist fund / activist shareholder / activist investor, Airbnb, airport security, barriers to entry, basic income, Bear Stearns, Big Tech, bitcoin, blockchain, Bonfire of the Vanities, California gold rush, cashless society, corporate raider, crack epidemic, cryptocurrency, discounted cash flows, disintermediation, diversification, diversified portfolio, do well by doing good, Donald Trump, driverless car, dumpster diving, eat what you kill, fiat currency, financial engineering, fixed income, friendly fire, full employment, Gordon Gekko, greed is good, initial coin offering, interest rate derivative, John Meriwether, junk bonds, Kickstarter, Long Term Capital Management, low interest rates, mandatory minimum, Mary Meeker, Max Levchin, Michael Milken, mobile money, Modern Monetary Theory, mortgage debt, Neil Armstrong, pensions crisis, pets.com, pre–internet, profit motive, proprietary trading, risk tolerance, Saturday Night Live, selling pickaxes during a gold rush, shareholder value, side project, Silicon Valley, Steve Jobs, technology bubble, The Predators' Ball, too big to fail, universal basic income, zero day

After serving two years in prison on multiple felony convictions, he had reinvented himself as a philanthropist, and even his once infamous history as the Junk Bond King was now celebrated. Except that nowadays, no one says junk bond. The accepted term is high-yield bond. So Michael Milken is again a hero, junk bonds are high-yield bonds, and corporate raiders have become activist investors. This signals a major evolution in American business, from the time of Steinberg’s attack on Disney through to the current day. While these activist investors can certainly bring about positive results, one unfortunate consequence is that management teams have become laser-focused on the bottom line—and, in particular, the short-term bottom line—often at the expense of investing in and creating the best product three or five years from now.

Today, if you open up the financial section of any major publication, you’ll discover that an incredible change has taken place in the public perception of corporate raiders. Gone are the days when the media painted them as scoundrels. They aren’t even called corporate raiders anymore, but rather activist investors. And in general, they’re viewed as good guys because they keep management teams honest and motivated. I recently attended a San Francisco Giants baseball game, and who threw out the first pitch? Our former-hero-turned-prison-inmate, Michael Milken. The crowd set down their hot dogs and beers and applauded him warmly.

That trust encourages shareholders to “rent” public equities, as it is often described, serving their broader investment objectives with little to no desire for the responsibilities that come with ownership. A significant majority of both ownership and trading volume is now passive or based on computer-driven trading algorithms, which leaves very few shareholders in the position of being watchdogs of accountability. Most of that responsibility is in the hands of the activist investors. Once considered bad guys, now they have become the conscience and protectors of our public markets. In the closing scene of Pretty Woman’s abandoned original script, Vivian is on a Greyhound bus with her roommate and best friend, Kit, who is also a prostitute. Edward had just left Vivian in a ruined heap on the sidewalk, and now the young women have hit the road to blow some of the money Vivian made that week as Edward’s escort.


pages: 586 words: 159,901

Wall Street: How It Works And for Whom by Doug Henwood

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, bond market vigilante , book value, borderless world, Bretton Woods, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, capital controls, Carl Icahn, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, disinformation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, Glass-Steagall Act, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, junk bonds, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, long and variable lags, Louis Bachelier, low interest rates, market bubble, Mexican peso crisis / tequila crisis, Michael Milken, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, planned obsolescence, plutocrats, Post-Keynesian economics, price mechanism, price stability, prisoner's dilemma, profit maximization, proprietary trading, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Savings and loan crisis, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, stock buybacks, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

As Charles Wohlstetter (1993), former chair of Contel, put it, "In sum, we have a group of people with increasing control of the Fortune 500 who have no proven skills in management, no experience at selecting directors, no believable judgment in how much should be spent for research or marketing — in fact, no experience except that which they have accumulated controlling other people's money." Pension funds are the least regulated of the major institutional investors, which is one reason they've been active in the shareholder rebellion, but this makes them accountable on none but purely financial measures. So rather than solving the agency problem, activist shareholding simply adds another layer of potential irresponsibility. And what do they really have to contribute? The best periods of U.S. economic growth have occurred when managers ran corporations and shareholders kept their mouths shut. Admittedly there's a chicken-egg problem here; it's no accident that Berle and Means' book came out during the Depression, that governance issues receded during the Golden Age, and that they returned as economic performance deteriorated in the 1970s.

Mutual funds have also shied away from governance issues; Fidelity, it's said by someone in the know, tried it and withdrew because of bad press, but the company didn't return phone calls asking for comment. Firms like mutual funds with highly visible public images don't want to get caught up in public controversies. But it's highly likely that many of the nonparticipating institutions are happy to have the activist funds in the lead, doing their work for them; they get the benefit of higher share prices without having to take the trouble, or risk their public image by pushing a controversial agenda. shareholders — who needs them? Just because Wall Street's short-termism is a cliche doesn't mean it isn't true.


pages: 278 words: 82,771

Built on a Lie: The Rise and Fall of Neil Woodford and the Fate of Middle England’s Money by Owen Walker

activist fund / activist shareholder / activist investor, bank run, banking crisis, barriers to entry, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Brexit referendum, British Empire, buy and hold, call centre, carbon footprint, clean water, coronavirus, corporate governance, COVID-19, fixed income, G4S, Kickstarter, knowledge economy, liquidity trap, lockdown, mass affluent, popular capitalism, profit motive, regulatory arbitrage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, stem cell, Steve Jobs, Winter of Discontent

He was previously asset-management correspondent at the newspaper and his reporting on Neil Woodford’s downfall led to the FT winning business and finance team of the year at the 2019 Society of Editors’ Press Awards. His first book, Barbarians in the Boardroom, covered activist investors and was published in 2016. By the same author Barbarians in the Boardroom: Activist Investors and the Battle for Control of the World’s Most Powerful Companies For Sarah, Arthur and Albie 1 Made in Maidstone From the Medway Room’s open window in the Grade II listed Sessions House, inmates from HM Prison Maidstone could be heard exercising in the yard outside.

Following months of wrangling, Woodford eventually gave his blessing to the merger after terms of the deal were sweetened. UK investment managers rarely publicly criticized companies in which they invested – with most preferring to voice their concerns in private meetings with the businesses’ executives. It was a tactic more often used by the growing band of abrasive activist investors who were finding their voice in the US. But Woodford realized he was becoming an influential force in corporate Britain – and he was not afraid to make his feelings known. Another of Woodford’s favourite industries was pharmaceuticals. He especially liked the largest players, which could be relied upon to sell products to needy customers whatever the economic conditions, allowing them to pay generous dividends consistently.

Index The page references in this index correspond to the print edition from which this ebook was created, and clicking on them will take you to the location in the ebook where the equivalent print page would begin. To find a specific word or phrase from the index, please use the search feature of your ebook reader. Woodford IM indicates Woodford Investment Management. AA 2, 143, 152 Abu Dhabi Investment Authority (ADIA) 108, 168–9, 189 Acacia Research 219 Accelerated Digital Ventures 168 activist investors 47 AIM (stock market) 72, 120, 162 Allied Minds 132, 144, 178 A. J. Bell 153, 155 Amvescap 50–51, 52–3, 54, 57, 58, 59–60, 61, 68 Andrew, Duke of York, Prince 50 Anglo-American 51 Anne, Princess 76 Anness, Stephen 61, 79 Arbib, Martyn 32–8, 45–6, 49–53, 64, 142 Arch Cru scandal 102–3, 151, 194 Argos 29 Armour, Mark 79, 87 Ashcroft, Michael 50 AstraZeneca 73, 82, 90, 119, 132, 143 Atom Bank 162, 191 Aubrey, Alan 146–7 Audit Commission 4 authorized corporate director (ACD) 100–103, 108–9, 141, 151, 163, 165, 174, 185, 186, 189–90, 195, 197, 204, 208, 209, 210–11 see also Capita Asset Services and Link Fund Solutions Autolus 163 Aviva 147 Babcock 131 BAE Systems 73, 83, 90 Bailey, Andrew 140–41, 165–6, 183, 185–7, 195, 202–3, 204, 205, 208, 210, 214 Baker-Bates, Rodney 81 Baker, Steve 186 Banghard, Lacey 136 Bank of England 28, 176, 185, 204, 205, 208 Barclays Bank 63, 65 Barnett, Mark 61, 79, 90, 97–8, 146, 147, 153, 155, 161, 167 Barrett, Claer 147 BAT Industries 26, 28, 29, 82 BBC 86, 106, 131 BCA Marketplace 188 Beioley, Kate 147 Belasko 165 Bell, Andy 153 see also A.


pages: 92 words: 23,741

Lessons From Private Equity Any Company Can Use by Orit Gadiesh, Hugh MacArthur

activist fund / activist shareholder / activist investor, call centre, corporate governance, financial engineering, inventory management, job-hopping, long term incentive plan, performance metric, shareholder value, stock buybacks, telemarketer

Some stop with the fundamentals of markets and financial results. Others—the more activist buyers—dig deeper. They track metrics that help them monitor progress toward operational goals before it shows up in the financial results. Rather than waiting to find out if the map (i.e., the blueprint) got them to the right place, activist investors use their onboard navigational systems constantly to make sure that they are headed in the right direction. Thus PE firms focus on operational measures that look forward, point to root causes, and thereby spur action. Measuring “profit per customer,” for example, looks backward. Measuring the “number of high-value customers acquired last month,” by contrast, illuminates a meaningful trend.

We don’t know the specifics of the mind-set that prevails in your business today. But our experience suggests strongly that too many companies have an operating culture that is stuck in the past and ill equips them for the present—let alone the future. In the current business environment, increasingly impacted by PE firms and other activist investors, people demand performance. They demand value creation. They are impatient with results that are only average (or worse). Most of what goes into creating such a mind-set has been included in the previous sections: Define the full potential. Develop the blueprint. Accelerate performance.


pages: 569 words: 156,139

Amazon Unbound: Jeff Bezos and the Invention of a Global Empire by Brad Stone

activist fund / activist shareholder / activist investor, air freight, Airbnb, Amazon Picking Challenge, Amazon Robotics, Amazon Web Services, autonomous vehicles, Bernie Sanders, big data - Walmart - Pop Tarts, Big Tech, Black Lives Matter, business climate, call centre, carbon footprint, Clayton Christensen, cloud computing, Colonization of Mars, commoditize, company town, computer vision, contact tracing, coronavirus, corporate governance, COVID-19, crowdsourcing, data science, deep learning, disinformation, disintermediation, Donald Trump, Downton Abbey, Elon Musk, fake news, fulfillment center, future of work, gentrification, George Floyd, gigafactory, global pandemic, Greta Thunberg, income inequality, independent contractor, invisible hand, Jeff Bezos, John Markoff, Kiva Systems, Larry Ellison, lockdown, Mahatma Gandhi, Mark Zuckerberg, Masayoshi Son, mass immigration, minimum viable product, move fast and break things, Neal Stephenson, NSO Group, Paris climate accords, Peter Thiel, Ponzi scheme, Potemkin village, private spaceflight, quantitative hedge fund, remote working, rent stabilization, RFID, Robert Bork, Ronald Reagan, search inside the book, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Snapchat, social distancing, SoftBank, SpaceX Starlink, speech recognition, Steve Ballmer, Steve Jobs, Steven Levy, tech billionaire, tech bro, techlash, TED Talk, Tim Cook: Apple, Tony Hsieh, too big to fail, Tragedy of the Commons, two-pizza team, Uber for X, union organizing, warehouse robotics, WeWork

Amazon Marketplace, where independent sellers hawked their wares on Amazon.com, exploded with a surge of low-priced products (including counterfeits and knockoffs) manufactured in China. In 2015, the total value of the products sold on the marketplace surpassed the value of the units that Amazon sold itself on its own site. Amazon acquired the organic supermarket chain Whole Foods Market in 2017, saving the iconic American grocer from an unwelcome incursion by activist investors, and boosting its own ineffectual efforts to crack the food business. Amazon also remade its delivery operations, lessening its reliance on partners like UPS with its own network of sortation centers, drivers, and cargo aircraft branded with the Amazon Prime logo. And it revived its advertising business, embedding ads in its search results just as Google had pioneered a decade before to Amazon’s annoyance, generating a profitable new revenue line for the company.

In 2016, the New York investment firm Neuberger Berman started sending letters to Whole Foods leadership and to other shareholders, complaining about complacent management, the unconventional CEO structure, and highlighting deficiencies like the absence of a rewards program. Their letter-writing campaign didn’t get much traction until that November, when Mackey responded to the pressure by taking over as sole chief executive—exactly the opposite of what the firm wanted. The move piqued the interest of hedge fund Jana Partners, a so-called “activist investor,” whose managing partner, Barry Rosenstein, believed Whole Foods was “lost and broken.” Jana bought stock in distressed companies, agitated for change, and usually minted money when it forced a firm to slash costs or found an acquirer to pay a premium for it. Quietly amassing Whole Foods stock that winter, Jana revealed itself as the company’s second largest shareholder in April 2017.

Rosseter stuck it out for a few months but felt her efforts were not being recognized. She called the work environment “stressful and unhappy.” So she prepared to leave Amazon Fresh, right as a bomb was dropped on top of it. * * * On April 21, 2017, Matt Yale, the head of regulatory affairs at Tusk Ventures, one of the firms advising Whole Foods amid the assault from activist investors, called Jay Carney, an acquaintance from the Obama administration. Would Amazon be interested in meeting with the organic grocer to discuss a strategic transaction? Carney referred the contact to Bezos and Jeff Wilke, who passed it along to Peter Krawiec, Amazon’s vice president of worldwide corporate development.


pages: 420 words: 94,064

The Revolution That Wasn't: GameStop, Reddit, and the Fleecing of Small Investors by Spencer Jakab

4chan, activist fund / activist shareholder / activist investor, barriers to entry, behavioural economics, Bernie Madoff, Bernie Sanders, Big Tech, bitcoin, Black Swan, book value, buy and hold, classic study, cloud computing, coronavirus, COVID-19, crowdsourcing, cryptocurrency, data science, deal flow, democratizing finance, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Everybody Ought to Be Rich, fake news, family office, financial innovation, gamification, global macro, global pandemic, Google Glasses, Google Hangouts, Gordon Gekko, Hacker News, income inequality, index fund, invisible hand, Jeff Bezos, Jim Simons, John Bogle, lockdown, Long Term Capital Management, loss aversion, Marc Andreessen, margin call, Mark Zuckerberg, market bubble, Masayoshi Son, meme stock, Menlo Park, move fast and break things, Myron Scholes, PalmPilot, passive investing, payment for order flow, Pershing Square Capital Management, pets.com, plutocrats, profit maximization, profit motive, race to the bottom, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robinhood: mobile stock trading app, Saturday Night Live, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, SoftBank, Steve Jobs, TikTok, Tony Hsieh, trickle-down economics, Vanguard fund, Vision Fund, WeWork, zero-sum game

Normally they are prevented from buying or selling shares if they know of some news, good or bad, that will affect a company’s share price. That would be insider trading. But the meme-stock squeeze was an exogenous event, and many faced no such restrictions. Call it outsider trading. For example, the activist investor Kurt Wolf of Hestia Partners agitated for months to get onto GameStop’s board. When he finally succeeded in June 2020, he sounded like he was with the company for the long term. “GameStop is a unique player in the gaming industry, and we are excited to be a part of the company’s next generation of leadership,” wrote Wolf in a press release.

Hestia’s returns were 162 percent in 2020 and 223 percent in the first quarter of 2021, largely on that one lucky investment. Unlike managers of other funds, he wasn’t allowed to sell his shares during the heart of the squeeze because he was on the board. Wolf resigned in April and promptly cashed in his winnings, according to securities filings.[17] John Broderick, an activist investor who runs Permit Capital, a fund named after a hard-to-catch fish, also took a stake and pressured the company. He chose to support Wolf’s taking a seat rather than asking for one himself—a concession that proved profitable. Wolf’s impressive gain was like the one that got away compared with Broderick, who was able to sell all his shares closer to the peak price.

BACK TO NOTE REFERENCE 5 Interview with Dan Egan by telephone, April 7, 2021. BACK TO NOTE REFERENCE 6 Caitlin McCabe, “Massachusetts Regulators File Complaint against Robinhood,” The Wall Street Journal, December 16, 2020. BACK TO NOTE REFERENCE 7 Svea Herbst-Bayliss, “Prominent Activist Investors Post Record 2020 Returns despite Pandemic-muted Activity,” Reuters, January 6, 2021. BACK TO NOTE REFERENCE 8 Christine Williamson, “Hedge Funds Chalk Up Decade’s Best Returns in 2020—HFR,” Pensions and Investments, January 8, 2021. BACK TO NOTE REFERENCE 9 “Taking Stock of 2020 So Far,” SoFi blog post, July 13, 2020, www.sofi.com/blog/taking-stock-of-2020-so-far.


pages: 179 words: 42,081

DeFi and the Future of Finance by Campbell R. Harvey, Ashwin Ramachandran, Joey Santoro, Vitalik Buterin, Fred Ehrsam

activist fund / activist shareholder / activist investor, bank run, barriers to entry, bitcoin, blockchain, collateralized debt obligation, crowdsourcing, cryptocurrency, David Graeber, Ethereum, ethereum blockchain, fault tolerance, fiat currency, fixed income, Future Shock, initial coin offering, Jane Street, margin call, money: store of value / unit of account / medium of exchange, Network effects, non-fungible token, passive income, peer-to-peer, prediction markets, rent-seeking, RFID, risk tolerance, Robinhood: mobile stock trading app, Satoshi Nakamoto, seigniorage, smart contracts, transaction costs, Vitalik Buterin, yield curve, zero-coupon bond

New projects like Automata10 allow users to buy governance votes directly and will likely accelerate the threat of malicious or hostile governance. In traditional companies, activist investors can buy shares and vote to tilt the company's direction as they desire. DeFi protocols with governance tokens are similar, except governance systems are launched much earlier into a protocol's life, which can create greater risks. Furthermore, in traditional companies, even activist investors are bound by a legally enforceable fiduciary “duty of loyalty” to minority shareholders, whereas in DeFi this does not exist. On March 13, 2021, there was a governance attack on True Seigniorage Dollar.


pages: 482 words: 149,351

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

Welch’s strategy caught on, helping fuel the great Wall Street merger boom of the 1980s, and spurred by Bork’s beefy message the administration of President Ronald Reagan took the brakes off.26 ‘The general modus operandi was to break apart the old conglomerates that had been assembled in the 1950s and 1960s,’ says Barry Lynn, a US antitrust expert, ‘and then reassemble the parts in ways that better linked like to like … [the] goal was to reduce competition as much as possible.’ This was profitable enough, but the transformation had a second stage: outsourcing, particularly the outsourcing of labour-intensive production facilities to cheap-labour countries like China or Bangladesh. This was driven especially hard by financial players and activist shareholders. And at the same time, also driven by financial players, bigger firms were aggressively expanding their use of tax havens to cut tax bills. These two related forms of offshoring – each involving taking money or operations elsewhere to escape paying out at home – gave large firms a killer cost advantage over their smaller, more domestically focused rivals, boosting their market power further.

If they choose to speak up, they risk everything – their contract, their land, their homes.’27 James Bloodworth, a British journalist who went undercover as a worker at an Amazon warehouse at Rugeley in Staffordshire in 2016, said he saw a similar problem affecting workers: he claimed conditions were so bad that it was ‘like a prison’.28 These changes in the landscape of economic power have most often been driven by investment funds, activist shareholders and other financial interests, which have forced firms to channel their growing profits not into research and development but into paying bumper dividends. ‘The pressure from financiers to increase profits has resulted in an ever swifter monopolisation of the industrial systems upon which we depend,’ wrote Lynn, and the new model of antitrust ‘builds vandalism right into the system’.


pages: 172 words: 46,104

Television Is the New Television: The Unexpected Triumph of Old Media in the Digital Age by Michael Wolff

activist fund / activist shareholder / activist investor, AOL-Time Warner, barriers to entry, Carl Icahn, commoditize, creative destruction, digital divide, disintermediation, Golden age of television, Great Leap Forward, hiring and firing, Joseph Schumpeter, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Michael Milken, Sheryl Sandberg, Silicon Valley, SoftBank, Steve Jobs, Susan Wojcicki, telemarketer, the medium is the message, vertical integration, zero-sum game

The open Web had become its opposite, with behavior, values, and levels of deadwood and phony-baloney jobs—and corporate-speak so deep and intense that outsiders doubled over in laughter—resembling nothing so much as the kind of companies that were regularly assaulted for being brain-dead in the 1980s and taken over by opportunistic raiders. In 2012, the raider—or “activist investor”—Dan Loeb took a stake in Yahoo, and, with hardly any resistance, gained a dominant voice on the Yahoo board. Old-line software executive Carol Bartz, appointed Yahoo’s chief in 2009, was dismissed in 2011 and replaced by Scott Thompson, who after Loeb accused him of fabricating details on his résumé was fired a few months later.

More surprisingly, as channels began to rely on fees from cable companies, those same cable companies came to control the Internet. Viacom, in 2005, divided itself in two, one part a mostly cable programming company, retaining the Viacom name, and then the other part, a new independent CBS, a mostly network broadcaster. Time Warner, after an assault by activist investor Carl Icahn in 2006, spun off its cable system, TWC (completed in 2009). Comcast, in 2009, bought NBC Universal, a content company. Each of these moves suggests doubt about a fundamental direction of the business and is, in some fashion, a circling-the-wagons move. Viacom, in part believing the Internet view that advertising will more and more migrate to digital form, pushes off CBS, its still entirely ad-supported broadcaster, in the hopes that, no longer competing with its cable channel brothers at Viacom (MTV, Comedy Central, Nickelodeon, etc.)


pages: 504 words: 139,137

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen

activist fund / activist shareholder / activist investor, Alan Greenspan, algorithmic trading, Andrei Shleifer, asset allocation, backtesting, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Black-Scholes formula, book value, Brownian motion, business cycle, buy and hold, buy low sell high, buy the rumour, sell the news, capital asset pricing model, commodity trading advisor, conceptual framework, corporate governance, credit crunch, Credit Default Swap, currency peg, currency risk, David Ricardo: comparative advantage, declining real wages, discounted cash flows, diversification, diversified portfolio, Emanuel Derman, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, financial engineering, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, global macro, Gordon Gekko, implied volatility, index arbitrage, index fund, interest rate swap, junk bonds, late capitalism, law of one price, Long Term Capital Management, low interest rates, managed futures, margin call, market clearing, market design, market friction, Market Wizards by Jack D. Schwager, merger arbitrage, money market fund, mortgage debt, Myron Scholes, New Journalism, paper trading, passive investing, Phillips curve, price discovery process, price stability, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, risk free rate, risk-adjusted returns, risk/return, Robert Shiller, selection bias, shareholder value, Sharpe ratio, short selling, short squeeze, SoftBank, sovereign wealth fund, statistical arbitrage, statistical model, stocks for the long run, stocks for the long term, survivorship bias, systematic trading, tail risk, technology bubble, time dilation, time value of money, total factor productivity, transaction costs, two and twenty, value at risk, Vanguard fund, yield curve, zero-coupon bond

ACTIVIST INVESTING Another way to create a catalyst is to engage actively in a discussion with the firm’s board, as activist investors do. Activist investing means buying shares in a company that could be worth more with better management and then trying to affect the decisions of the firm. When an investor has bought more than 5% of the shares in a U.S. stock, he must make a so-called “13D filing,” where he reports his position size and declares whether he intends to be active. The mere presence of an activist investor can send a message to management to get their act together. Furthermore, the activist investor may make specific suggestions to the management or board, e.g., by sending a letter suggesting a replacement of the management, changing certain board members, giving cash back to shareholders, cutting costs, or selling assets that are worth more elsewhere and focusing on the remaining firm.

For example, figure 9.8 shows the price discount of BMW’s preference shares relative to the regular shares, a discount that varies over time and has been large for long time periods. Trading on the spread across share classes is not a perfect arbitrage, not just because the spread can widen but also because corporate events can lead to a different treatment of the different share classes. For instance, an activist investor might propose corporate actions that affect the share classes differently, e.g., differential share repurchases. On the other hand, many corporate events can also lead to a collapse of the spread, e.g., this may happen if the company is taken over. Figure 9.8. The price discount of BMW preference shares relative to the ordinary shares.


pages: 356 words: 106,161

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century by Rodrigo Aguilera

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, availability heuristic, barriers to entry, basic income, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, bitcoin, Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, carbon footprint, Carmen Reinhart, centre right, clean water, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer age, Corn Laws, corporate governance, corporate raider, creative destruction, cryptocurrency, cuban missile crisis, David Graeber, David Ricardo: comparative advantage, death from overwork, decarbonisation, deindustrialization, Deng Xiaoping, Doha Development Round, don't be evil, Donald Trump, Doomsday Clock, Dunning–Kruger effect, Elon Musk, European colonialism, fake news, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, fundamental attribution error, gig economy, Gini coefficient, Glass-Steagall Act, Great Leap Forward, green new deal, Hans Rosling, housing crisis, income inequality, income per capita, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, karōshi / gwarosa / guolaosi, Kenneth Rogoff, Kickstarter, lake wobegon effect, land value tax, Landlord’s Game, late capitalism, liberal capitalism, long peace, loss aversion, low interest rates, Mark Zuckerberg, market fundamentalism, means of production, meta-analysis, military-industrial complex, Mont Pelerin Society, moral hazard, moral panic, neoliberal agenda, Network effects, North Sea oil, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, Overton Window, Pareto efficiency, passive investing, Peter Thiel, plutocrats, principal–agent problem, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, savings glut, Scientific racism, secular stagnation, Silicon Valley, Silicon Valley ideology, Slavoj Žižek, Social Justice Warrior, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Stanislav Petrov, Steven Pinker, structural adjustment programs, surveillance capitalism, tail risk, tech bro, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transatlantic slave trade, trolley problem, unbiased observer, universal basic income, Vilfredo Pareto, Washington Consensus, Winter of Discontent, Y2K, young professional, zero-sum game

Alas, most of the time such votes are not non-binding they have no impact on workers’ pay either — the problem is not just that executive pay has skyrocketed since the 1970s but that employee wages have not risen nearly enough in real terms. Thus far, say-on-pay has been mostly voluntary, usually as a result of a shareholder revolt, which in turn is driven mainly by one or more large institutional shareholders (such as pension funds) or activist investors concerned over the firm’s mediocre performance. Figure 6.5: The biggest beneficiaries of globalization and liberal capitalism Notes: This data set averages the CEO pay of the top 350 US firms and includes all forms of compensation including salary, bonuses, restricted stock grants, long-term incentive payouts, and either options realized or granted.

Even the radicalism of the sixties served, for many of those who embraced it for personal rather than political reasons, not as a substitute religion but as a form of therapy. Radical politics filled empty lives, provided a sense of meaning and purpose.18 Woke capitalism doesn’t simply involve the relationship between a corporate elite and its customers, but also of the elite to itself. Recent years have seen the rise of the “activist investor”, usually large institutional shareholders putting pressure on companies to make progress on what is known in business lingo as Environmental, Social, and Governance (ESG) criteria. Directly challenging Milton Friedman’s insistence that a company’s sole responsibility is profit, these efforts appear to be proof that capitalism can be shifted to a more ethically-minded equilibrium without the need for state regulation imposing it from the top down.

Worse still is the fact that the bulk of investor activism has nothing to do with ESG targets. Most tend to focus on other self-interested objectives like replacing board members that do not align with investors’ desired strategy, or to force companies to pursue mergers or divest assets, (no surprise that many activist investors are hedge funds). While a far cry from the corporate raiders of liberal capitalism’s 1980s heyday as exemplified by films like Wall Street or books like Barbarians at the Gate that were illustrative of the earlier generation of investor activism, we are still far from the point in which capitalism will ethically police itself.


pages: 257 words: 71,686

Swimming With Sharks: My Journey into the World of the Bankers by Joris Luyendijk

activist fund / activist shareholder / activist investor, bank run, barriers to entry, Bonfire of the Vanities, bonus culture, collapse of Lehman Brothers, collective bargaining, corporate raider, credit crunch, Credit Default Swap, Emanuel Derman, financial deregulation, financial independence, Flash crash, glass ceiling, Gordon Gekko, high net worth, hiring and firing, information asymmetry, inventory management, job-hopping, Large Hadron Collider, light touch regulation, London Whale, Money creation, Nick Leeson, offshore financial centre, regulatory arbitrage, Satyajit Das, selection bias, shareholder value, sovereign wealth fund, the payments system, too big to fail

The question often came with a cynical laugh as if nothing genuinely serious was at stake; they seemed to anticipate my answer would be ‘greed’, ‘cocaine’ or ‘arrogance’. Many referred to the Gordon Gekko character from the iconic 1987 film Wall Street and his famous quote: ‘Greed, for want of a better word, is good.’ I would resist pointing out that Gordon Gekko was not a banker but a ‘corporate raider’ or ‘activist shareholder’ taking over companies against their will, and instead I’d tell them how some of the things I’d learnt about bankers had ‘lightning-bolted me off my horse’, as the Flemish expression goes. I had had no idea just how much damage the financial sector can do to society let alone how terrifyingly close to the brink we were in 2008.


pages: 193 words: 11,060

Ethics in Investment Banking by John N. Reynolds, Edmund Newell

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, banking crisis, Bear Stearns, collapse of Lehman Brothers, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, discounted cash flows, financial independence, Glass-Steagall Act, index fund, invisible hand, junk bonds, light touch regulation, margin call, Michael Milken, moral hazard, Nick Leeson, Northern Rock, proprietary trading, quantitative easing, shareholder value, short selling, South Sea Bubble, stem cell, the market place, The Wealth of Nations by Adam Smith, too big to fail, two and twenty, zero-sum game

At times, shareholders can put pressure on company boards and executives to take increased risks. Shareholder support – or the lack of it – for companies has clearly affected the behaviour of some banks and investment banks, but such pressure is not always farsighted. In 2007, there was extensive external pressure on HSBC to reform its activities, including pressure from activist shareholders. It became clear from late 2007 onwards, as the financial crisis developed, that while HSBC had eschewed some short-term opportunities for profits, despite highprofile exposure to sub-prime loans in the US, its shareholder value had been more effectively stewarded than that of many other UK and global banks.


pages: 232 words: 70,361

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay by Emmanuel Saez, Gabriel Zucman

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, behavioural economics, Berlin Wall, book value, business cycle, carbon tax, Cass Sunstein, classic study, collective bargaining, Cornelius Vanderbilt, corporate governance, cross-border payments, Donald Trump, financial deregulation, government statistician, income inequality, income per capita, independent contractor, informal economy, intangible asset, Jeff Bezos, labor-force participation, Lyft, Mark Zuckerberg, market fundamentalism, Mont Pelerin Society, mortgage debt, mortgage tax deduction, new economy, offshore financial centre, oil shock, patent troll, profit maximization, purchasing power parity, race to the bottom, rent-seeking, ride hailing / ride sharing, Ronald Reagan, shareholder value, Silicon Valley, single-payer health, Skype, Steve Jobs, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transfer pricing, trickle-down economics, uber lyft, very high income, We are the 99%

In the United States today, conventional wisdom holds that the goal of CEOs must be to grow the stock price of their firms. Corporations, according to that world view, are nothing more than a conglomerate of investors pooling their resources together. Although some corporate leaders may lament being hamstrung by activist shareholders, they all consider it their duty to maximize shareholder value. And dodging taxes unquestionably enhances shareholder value. Less tax paid means more after-tax profits that can be distributed in dividends to shareholders or used to buy back shares. But the shareholder-is-king doctrine is not universal, as evidenced by the diverse compositions of corporate boards across the world.


pages: 215 words: 69,370

Still Broke: Walmart's Remarkable Transformation and the Limits of Socially Conscious Capitalism by Rick Wartzman

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, An Inconvenient Truth, basic income, Bernie Sanders, call centre, collective bargaining, coronavirus, COVID-19, cryptocurrency, data science, Donald Trump, employer provided health coverage, fulfillment center, full employment, future of work, George Floyd, illegal immigration, immigration reform, income inequality, Jeff Bezos, job automation, Kickstarter, labor-force participation, low skilled workers, Marc Benioff, old-boy network, race to the bottom, RAND corporation, rolodex, Ronald Reagan, Salesforce, shareholder value, supply-chain management, TikTok, Triangle Shirtwaist Factory, union organizing, universal basic income, War on Poverty, warehouse robotics, We are the 99%, women in the workforce, working poor

General Motors, for example, said in 1950 that it was “in business to make a profit” so it could “pay for research and improved tools and methods” in order to turn out better products for its customers; “provide jobs and opportunities for employees”; “earn a satisfactory return for investors”; “help others progress, including dealers and suppliers”; and “pay our share of the heavy cost of government.” Many other large companies adopted a similarly well-rounded position. But over time, this approach to running a corporation fell out of favor. A band of activist shareholders—“raiders,” as they were then known—pushed back against the idea that the interests of all stakeholders should be balanced. Having latched on to the theories of the University of Chicago’s Milton Friedman, the University of Rochester’s Michael Jensen, and other academics, they contended that a company’s singular focus should be on boosting shareholder value.


pages: 459 words: 118,959

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff by Christine S. Richard

activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, Blythe Masters, book value, buy and hold, Carl Icahn, cognitive dissonance, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, electricity market, family office, financial innovation, fixed income, forensic accounting, glass ceiling, Greenspan put, Long Term Capital Management, market bubble, money market fund, moral hazard, old-boy network, Pershing Square Capital Management, Ponzi scheme, profit motive, Savings and loan crisis, short selling, short squeeze, statistical model, stock buybacks, subprime mortgage crisis, white flight, zero-sum game

It was from Ackman and filled with books: Graham and Dodd’s Security Analysis, Peter Lynch’s One Up on Wall Street, Benjamin Graham’s Intelligent Investor, Lawrence Cunningham’s The Essays of Warren Buffett, and Thornton O’glove’s Quality of Earnings. These were Ackman’s favorite books on investing, and he wanted White to read them all. Ackman made his reputation on Wall Street as an activist investor, a high-profile role that requires a knack for showmanship. But those who know Ackman well say he is an analyst at heart. “He is the smartest analyst I’ve ever met,” says Rafael Mayer, managing director of Khronos LLC, a family office and fund of funds investor, and a friend of Ackman’s. “He looks at something and he just decomposes it.”

Despite all of Ackman’s efforts, “the court of public opinion just wasn’t ruling on MBIA,” Bernstein says. When Bernstein met friends after work for drinks, they asked him what Pershing investments he was working on. He could never tell them that he’d been assigned to work on the profitable ones, the ones that were catapulting Ackman into the news as a successful activist investor. Bernstein recalls a few friends who worked for funds of funds, which invest in hedge funds, sharing their bosses’ views on Ackman: “It’s the MBIA obsession; that’s why our fund isn’t investing with Pershing Square,” they told Bernstein. The consensus on Ackman and his persistence about MBIA was that he was either “a genius or a lunatic,” says Bernstein.

Chapter Nineteen Ratings Revisited To keep the music playing required increasingly egregious excesses—ever greater quantities of increasingly risky loans, structures and leveraging —DOUG NOLAND, DAVID TICE & ASSOCIATES, DECEMBER 2007 IN DECEMBER 2007, Bill Ackman went door to door with his presentation on the bond insurers, launching perhaps the most aggressive “short” campaign in the history of Wall Street. Activist investors typically buy a stake in a company and then pressure management to make changes that will drive up the stock price. Short selling and activism are a much more complex pairing. An activist can’t exactly advocate for changes that will cause the company’s share price to collapse or cause it to file for bankruptcy.


pages: 244 words: 79,044

Money Mavericks: Confessions of a Hedge Fund Manager by Lars Kroijer

activist fund / activist shareholder / activist investor, Bear Stearns, Bernie Madoff, book value, capital asset pricing model, corporate raider, diversification, diversified portfolio, equity risk premium, family office, fixed income, forensic accounting, Gordon Gekko, hiring and firing, implied volatility, index fund, intangible asset, Jeff Bezos, Just-in-time delivery, Long Term Capital Management, Mary Meeker, merger arbitrage, NetJets, new economy, Ponzi scheme, post-work, proprietary trading, risk free rate, risk-adjusted returns, risk/return, shareholder value, Silicon Valley, six sigma, statistical arbitrage, Vanguard fund, zero-coupon bond

To Puk, Anna and Sofia – my three girls Contents About the author Acknowledgements About the second edition Introduction Part One Getting ready for Holte Capital 1 Becoming a hedgie 2 Taking the plunge 3 Starting a hedge fund 4 On the road 5 Limping to launch Part Two Becoming the real deal 6 Mickey Mouse fund 7 Breaking through 8 Scaling up and meeting the Godfather 9 The real deal 10 Being corporate 11 Activist investor 12 A day in the life Part Three On the front line 13 Getting fully examined 14 Blood in the streets 15 Edge 16 Made it? 17 Friends and competition 18 Making your commissions count 19 Are we worth it? Part Four The fast road down 20 Feeling grim 21 A bad day 22 A bad run 23 Going home 24 Rethinking Holte Capital Beyond hedge funds – portfolio tips for amateurs Index Acknowledgements As a first time author I probably needed more help than the journalists and professors that often write about finance, and I am thrilled that such an insightful and helpful group of people helped me to finish the book.

If you had a bad month while other hedge funds did well, you generally felt crap about yourself; and it was a whole month before you could send out an investor letter with a new number. With the weight of a bad monthly return hanging over you, the pressure to shine was even greater. 11 * * * Activist investor The no-BS rule If there was one thing I always enjoyed about small financial shops like Holte Capital, it was the complete absence of internal politics. Compared with Lazard Frères, where even 22-year-old analysts like me quickly learned they had to navigate the office minefield to find the best deals to work on, my hedge-fund experience was simple.


pages: 600 words: 72,502

When More Is Not Better: Overcoming America's Obsession With Economic Efficiency by Roger L. Martin

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, autism spectrum disorder, banking crisis, Black Monday: stock market crash in 1987, butterfly effect, call centre, cloud computing, complexity theory, coronavirus, COVID-19, David Ricardo: comparative advantage, do what you love, Edward Lorenz: Chaos theory, financial engineering, Frederick Winslow Taylor, Glass-Steagall Act, High speed trading, income inequality, industrial cluster, inflation targeting, Internet of things, invisible hand, Lean Startup, low interest rates, Lyft, Mark Zuckerberg, means of production, Network effects, new economy, obamacare, open economy, Phillips curve, Pluto: dwarf planet, power law, Renaissance Technologies, Richard Florida, Ronald Reagan, scientific management, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, Tax Reform Act of 1986, The future is already here, the map is not the territory, The Wealth of Nations by Adam Smith, Tobin tax, Toyota Production System, transaction costs, trickle-down economics, two-sided market, uber lyft, very high income, Vilfredo Pareto, zero-sum game

In a downright scary study, finance professors John Graham, Campbell Harvey, and Shiva Rajgopal confirm this. They surveyed four hundred financial executives from large US public companies and found that a majority of the executives agreed that in order to meet the current quarter’s analyst-consensus earnings, they would defer or cancel attractive projects.16 These managers live in fear of an “activist investor” showing up in their share register and exerting pressure on the company to improve its financial performance. And while these investors usually claim to be interested in the long-term performance of their targets, they actually don’t care. Their holding periods are short—422 days on average for American activist hedge funds.17 At the same time, executive tenure is getter shorter.

Tacey Rychter, “How Compulsory Voting Works: Australians Explain,” The New York Times, October 22, 2018. 39. Kevin Morris and Peter Dunphy, “AVR Impact on State Voter Registration,” Brennan Center for Justice, 2019, https://www.brennancenter.org/sites/default/files/2019-08/Report_AVR_Impact_State_Voter_Registration.pdf. Index AARP, 192 activist investors, 155, 158–159 adaptation, 82–83, 84, 103–106, 129–130, 142–143 AdSense, 154 Advanced Micro Devices, 129 Affordable Care Act, 92 agricultural workers, 192 Ahir, Hites, 82 almond industry, 73–75 Alphabet, 134 Amazon, 134, 192 American Dream, 2 American International Group (AIG), 137 analogic reasoning, 25–26 Anheuser-Busch InBev (ABI), 123–124 anomalies, 111–112 antitrust legislation, 53–56, 152, 153 Apple iOS, 131 Argyris, Chris, 167, 178 Aristotle, 183 Aspen Publishers, 77 AT&T, 53–54, 130–131 Atlanta testing scandal, 45–46, 53 Australia, 206 auto exports, 151 Avishai, Ellie, 171 Bain & Company, 175 balance, 183–184 balanced scorecard, 129 Bank Act (Canada), 139, 143 bank bailouts, 137–138 Bank Holding Company Act, 108 bankruptcies, 97–98, 137 banks, 137–142, 151 baseball, 101–102 Bass, Jo Ann, 116, 118 Belgium, 157 bell curve, 33, 72 See also Gaussian distribution Bernanke, Ben, 78, 79 bid-ask spreads, 55–56 Bieber, Justin, 65 Black Monday, 52 Blue Chip Economic Indicators forecast, 77–78, 82 bond market, 109–111 bond-rating agencies, 109–111 Boston Consulting Group, 175 Box, George, 25 boycotts, 189, 192 Bracken, Michael, 147–149 Bridgewater Associates, 31 Bristol University, 184 budgets, 124, 126, 173, 199–200 Buffett, Warren, 157 Bush, George W., 30 business adaptation in, 129–130 proxies in, 49–53 business executives, 113 agenda for, 115–135 backgrounds of, 120–121 reductionism and, 121–122 business models, 27–29 business schools, 32, 174–176, 180 business siloes, 32, 122 business strategy, 175–176 butterfly effect, 81 buycotts, 189, 192 buying groups, 192 buy recommendations, 112–113 cable TV, 130, 131 Canada antitrust policies in, 55 financial system of, 138–142, 151 metaphor for, 26 voter registration in, 205–206 capital efficiency, 97–99 capitalism, 4, 12 See also democratic capitalism discontent with, 12–13 survival of, 210 capital markets, 50, 55, 85, 86, 99, 109–110, 112, 129, 155 capital-markets policy, 55 Cargill, 133 cash flows, 97–98 central limit theorem, 35, 60 certainty, teaching, 170–173, 181, 185 Chambers, John, 51–52 chaos theory, 81 Chavez, Cesar, 192 Chicago Board of Trade, 64, 90 chief executive officers (CEOs), 64, 86–88, 121, 155 See also business executives China, 151, 210 Churchill, Winston, 26 circuit-breaker system, 108 Cisco Systems, 51–52 citizens, 114 agenda for, 187–207 collective action by, 192–197, 207 engagement of, 198–201 interviews of, 147–148 model of, 145 passive, 198 purchasing power of, 188–192, 207 reciprocal political relationships and, 197–200 responsibility of, 189–190 voting by, 201–206 civil-law system, 105–106 Clayton Antitrust Act, 53 Clinton, Bill, 54 cloud computing, 131 clustered industries, 67–70 collapsing sand pile example, 61–62 collective action, 192–197, 207 college students, 172–173 commercial banks, 108 common-law system, 105–106 communism, 15 comparative advantage, 40–41, 56 compensation theory, 146 competition, 63–65, 131–135, 151 competition policy, 53–54 competitive advantage, 67, 71 Competitive Advantage of Nations, The (Porter), 17, 67 complex adaptive systems, 80, 176–178, 182, 211–212 See also natural systems complexity design for, 100–103 teaching about, 176–177 complexity theory, 61–62, 81 Congressional Budget Office (CBO), 31, 78, 79 connectedness, 106–113 consensus estimates, 86, 87 Consensus Forecasts, 82 consolidation See also mergers industry, 71–73 consumer protection, 54 continuous adaptation, 82–83, 105–106 Contract with America, 198, 199 Costco, 125 Cowan, George, 177 Crawford, Cindy, 64, 65 creativity-intensive jobs, 68–70 Criterion-Referenced Competency Tests (CRCT), 45–46 customer experience, 117, 122–123 customer feedback, 130, 135 customer loyalty, 27–29, 48 customer value, 130 Dalio, Ray, 31 Darwin, Charles, 129–130 data directly observable, 178–181 interpretation of, 172, 178–179 Data Resources Inc.


pages: 304 words: 80,965

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson

activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, buy and hold, Carl Icahn, centralized clearinghouse, clean water, compensation consultant, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, income inequality, index fund, information asymmetry, invisible hand, John Bogle, Kenneth Arrow, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, Paul Volcker talking about ATMs, payment for order flow, performance metric, Ponzi scheme, post-work, principal–agent problem, rent-seeking, Ronald Coase, seminal paper, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks

A passenger took a run-of-the-mill complaint about a musical instrument damaged in a baggage transfer and turned it into a YouTube video called “United Breaks Guitars.”39 The company was caught flat-footed when the video went viral, exacting a nasty reputation hit. Investors have joined in too, though less often. Yahoo! saw perhaps the best-known example in 2007 when Eric Jackson, a retail investor with a handful of shares, stirred a large-scale shareowner revolt through his Breakout Performance social media campaign. The activist investor Carl Icahn started using Twitter in June 2013 as part of a battle over the Dell buyout and quickly gained 76,000 followers.40 Then there is retail shareholder David Webb, in Hong Kong, who writes a blog from his home flat. People feed him tips about insider corporate wrongdoing that could never appear in Hong Kong’s mainstream media, because they are controlled by either the state or major families.

“Governing Banks” (Global Governance Forum/International Finance Corporation, 2010). 33. Upton Sinclair, “I, Candidate for Governor: And How I Got Licked” (University of California Press, 1994). (Originally printed 1936.) 34. Ronald J. Gilson and Jeffrey N. Gordon, “The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights,” March 11, 2013, Columbia Law Review, 2013, ECGI—Law Working Paper no. 197, Columbia Law and Economics Working Paper no. 438, Rock Center for Corporate Governance at Stanford University Working Paper no. 130, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2206391. 35.


pages: 338 words: 85,566

Restarting the Future: How to Fix the Intangible Economy by Jonathan Haskel, Stian Westlake

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Andrei Shleifer, Big Tech, Black Lives Matter, book value, Boris Johnson, Brexit referendum, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, Charles Lindbergh, charter city, cloud computing, cognitive bias, cognitive load, congestion charging, coronavirus, corporate governance, COVID-19, creative destruction, cryptocurrency, David Graeber, decarbonisation, Diane Coyle, Dominic Cummings, Donald Shoup, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, equity risk premium, Erik Brynjolfsson, Estimating the Reproducibility of Psychological Science, facts on the ground, financial innovation, Francis Fukuyama: the end of history, future of work, general purpose technology, gentrification, Goodhart's law, green new deal, housing crisis, income inequality, index fund, indoor plumbing, industrial cluster, inflation targeting, intangible asset, interchangeable parts, invisible hand, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, knowledge worker, lockdown, low interest rates, low skilled workers, Marc Andreessen, market design, Martin Wolf, megacity, mittelstand, new economy, Occupy movement, oil shock, patent troll, Peter Thiel, Phillips curve, postindustrial economy, pre–internet, price discrimination, quantitative easing, QWERTY keyboard, remote working, rent-seeking, replication crisis, risk/return, Robert Gordon, Robert Metcalfe, Robert Shiller, Ronald Coase, Sam Peltzman, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, six sigma, skeuomorphism, social distancing, superstar cities, the built environment, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, urban planning, We wanted flying cars, instead we got 140 characters, work culture , X Prize, Y2K

Most countries’ tax systems favour debt over equity, allowing debt interest payments, but not the cost of equity, to be treated as a tax-deductible expense. In recent decades, the incentives for company managers to optimise their capital structure have sharpened. The shareholder-value movement, the rise of activist investors, and the growth of leveraged buyout funds make it harder for managers to ignore the economic advantages of debt finance. The institutions and norms of debt finance are more abundant than those of equity finance. Banks offer loans, employ loan officers, and use a range of tools to assess creditworthiness; businesses apply for loans.

Companies managed for shareholder value, so the argument goes, will overlook attractive but complex projects that are hard to explain to ignorant traders with short attention spans. Instead, they will settle for simple but suboptimal plans: cut costs, eke out the current product line, return cash to shareholders. Again, to some extent the critics’ argument is overblown; the study by Brav, Jiang, and Ma discussed earlier found that activist investors were associated with long-term increases, not just temporary bumps, in the value of the companies they bought into.28 Alex Edmans looked at what happened when financial institutions accumulated largeish positions, or blocks, in a company’s stock. Companies with blockholders turned out to be more willing to invest in R&D—probably, Edmans concluded, because an investor with a large position found it worthwhile to scrutinise complex investment plans with short-term costs, whereas dispersed investors were more likely to challenge the plans.29 In sum, we have a set of financial instruments and institutions that suit a world with low information load and low spillovers: bank debt, value investing, and simple governance rules.


pages: 305 words: 79,303

The Four: How Amazon, Apple, Facebook, and Google Divided and Conquered the World by Scott Galloway

"Susan Fowler" uber, activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Robotics, Amazon Web Services, Apple II, autonomous vehicles, barriers to entry, Ben Horowitz, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Brewster Kahle, business intelligence, California gold rush, Cambridge Analytica, cloud computing, Comet Ping Pong, commoditize, cuban missile crisis, David Brooks, Didi Chuxing, digital divide, disintermediation, don't be evil, Donald Trump, Elon Musk, fake news, follow your passion, fulfillment center, future of journalism, future of work, global supply chain, Google Earth, Google Glasses, Google X / Alphabet X, Hacker Conference 1984, Internet Archive, invisible hand, Jeff Bezos, Jony Ive, Khan Academy, Kiva Systems, longitudinal study, Lyft, Mark Zuckerberg, meta-analysis, Network effects, new economy, obamacare, Oculus Rift, offshore financial centre, passive income, Peter Thiel, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, risk tolerance, Robert Mercer, Robert Shiller, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, Snapchat, software is eating the world, speech recognition, Stephen Hawking, Steve Ballmer, Steve Bannon, Steve Jobs, Steve Wozniak, Stewart Brand, supercomputer in your pocket, Tesla Model S, the long tail, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, vertical integration, warehouse automation, warehouse robotics, Wayback Machine, Whole Earth Catalog, winner-take-all economy, working poor, you are the product, young professional

Firms in old-economy or niche sectors seem to have an easier time coming to grips with aging and aren’t as susceptible to the kind of midlife crises that are expensive and create a great deal of misery for stakeholders. It’s difficult to find pragmatists to run these companies at the end of the alphabet, but they are out there. They can be activist shareholders or partners in private equity firms who have seen firms die and realize that there are worse things than death—specifically a slow death where shareholders are bankrupted trying to give PopPop just one more day. Pragmatists can make unemotional, even cold, decisions to move Nana home and enjoy her last days (that is, return a shitload of cash to investors).


pages: 444 words: 84,486

Radicalized by Cory Doctorow

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, air gap, Bernie Sanders, Black Lives Matter, call centre, crisis actor, crowdsourcing, cryptocurrency, data science, Edward Snowden, Flash crash, G4S, high net worth, information asymmetry, Kim Stanley Robinson, license plate recognition, Neal Stephenson, obamacare, old-boy network, public intellectual, satellite internet, six sigma, Social Justice Warrior, stock buybacks, TaskRabbit

The twin collapse of Disher and Boulangism did have a shared cause, Salima discovered. Both companies were publicly traded and both had seen more than 20 percent of their shares acquired by Summerstream Funds Management, the largest hedge fund on earth, with $184 billion under management. Summerstream was an “activist shareholder” and it was very big on stock buybacks. Once it had a seat on each company’s board—both occupied by Galt Baumgardner, a junior partner at the firm, but from a very good Kansas family—they both hired the same expert consultant from Deloitte to examine the company’s accounts and recommend a buyback program that would see the shareholders getting their due return from the firms, without gouging so deep into the companies’ operating capital as to endanger them.


pages: 353 words: 81,436

Buying Time: The Delayed Crisis of Democratic Capitalism by Wolfgang Streeck

"there is no alternative" (TINA), "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, air traffic controllers' union, Alan Greenspan, banking crisis, basic income, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collective bargaining, corporate governance, creative destruction, currency risk, David Graeber, deindustrialization, Deng Xiaoping, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial repression, fixed income, full employment, Garrett Hardin, Gini coefficient, Growth in a Time of Debt, income inequality, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, labour mobility, late capitalism, liberal capitalism, low interest rates, means of production, moral hazard, Myron Scholes, Occupy movement, open borders, open economy, Plutonomy: Buying Luxury, Explaining Global Imbalances, profit maximization, risk tolerance, shareholder value, too big to fail, Tragedy of the Commons, union organizing, winner-take-all economy, Wolfgang Streeck

In the debt state, therefore, a second category of stakeholders appears alongside the citizens who, in the democratic tax state and established political theory, constituted the only reference group of the modern state. The rise of creditors to become the second ‘constituency’62 of the modern state is strikingly reminiscent of the emergence of activist shareholders in the corporate world under the ‘shareholder value’ doctrine of the 1980s and 1990s.63 Like the boards of publicly listed companies in relation to the new ‘markets for corporate control’, the governments of today’s debt states in their relationship with the ‘financial markets’ are forced to serve a further set of interests whose claims have suddenly increased because of their greater capacity to assert themselves in more liquid financial markets.


pages: 274 words: 81,008

The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything by Jason Kelly

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, antiwork, barriers to entry, Bear Stearns, Berlin Wall, call centre, Carl Icahn, carried interest, collective bargaining, company town, corporate governance, corporate raider, Credit Default Swap, diversification, eat what you kill, Fall of the Berlin Wall, family office, financial engineering, fixed income, Goldman Sachs: Vampire Squid, Gordon Gekko, housing crisis, income inequality, junk bonds, Kevin Roose, late capitalism, margin call, Menlo Park, Michael Milken, military-industrial complex, Occupy movement, place-making, proprietary trading, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Rubik’s Cube, San Francisco homelessness, Sand Hill Road, Savings and loan crisis, shareholder value, side project, Silicon Valley, sovereign wealth fund, two and twenty

His preference is to keep owners after the acquisition to take advantage of their “passion” for the company.5 Part of the attraction for Wall Street about the Dollar General story is the relative outperformance of the company versus Family Dollar, which fended off its own takeover in 2011. That approach, from activist shareholder Nelson Peltz, spurred more interest from other hedge funds. Bill Ackman bought shares of Family Dollar in 2011 and told an investment conference in New York that year he believed he could make money if Family Dollar could replicate Dollar General’s success.6 I asked Dreiling whether he worried he’d given his competitors a blueprint they could use to beat him.


pages: 1,239 words: 163,625

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

When acquisition costs are similar, we much prefer to purchase $2 of earnings that is not reportable by us under standard accounting principles than to purchase $1 of earnings that is reportable.”10 Noted value investor Thomas Russo has often talked about companies that have “the capacity to suffer,” or the capacity to reinvest to build long-term competitive advantage at the cost of depressed short-term reported earnings. Usually, these companies have an ownership structure that keeps activist investors at bay. Usually, some individual or entity has enough control to adhere to a strategic path and build a long-term economic franchise without bothering too much about short-term profitability. Growing a business in a new market requires high upfront costs. These higher costs depress current earnings, which negatively affect the stock price in a shortsighted market.

Warren Buffett, Berkshire Hathaway 1983 Annual Letter to Shareholders, March 14, 1984, http://www.berkshirehathaway.com/letters/1983.html. 10. Warren Buffett, Berkshire Hathaway 1989 Annual Letter to Shareholders, March 2, 1990, http://www.berkshirehathaway.com/letters/1989.html. 20. Investing in Commodity and Cyclical Stocks Is All About the Capital Cycle 1. Tobias E. Carlisle, Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations (Hoboken, NJ: Wiley, 2014). 2. Edward Chancellor, Capital Returns: Investing Through the Capital Cycle: A Money Manager’s Reports 2002–15 (Basingstoke, UK: Palgrave Macmillan, 2016). Subsequent citations are to this edition unless otherwise noted. 3.

Five Elements of Effective Thinking. Princeton, NJ: Princeton University Press, 2012. Butler, Hartman. “An Hour with Mr. Graham.” Graham and Doddsville, March 6, 1976. http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Benjamin%20Graham/an-hour-ben-graham.pdf. Carlisle, Tobias E. Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations. Hoboken, NJ: Wiley, 2014. Carlson, Ben. A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan. Hoboken, NJ: Bloomberg Press, 2015. Carlson, Ben. “Peter Lynch on Stock Market Losses.” A Wealth of Common Sense, August 2, 2014. http://awealthofcommonsense.com/2014/08/peter-lynch-stock-market-losses. ——.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar

In the absolute performance case, taking market share from a rival is not rewarded unless it raises absolute profits, softening competition. A recent study shows a strong decline in relative compensation with common ownership: more commonly owned firms have compensation practices that systematically discourage aggressive competition.28 • The investor could block bids by activist investors interested in aggressive competition.29 • Even less directly, but perhaps most perniciously, institutional investors could promote business standards, practices, and beliefs that superficially appear to be “pro-business” or “pro-shareholder,” but also tend to reduce competition. Under the cover of promoting good corporate governance, institutional investors could promote initiatives to “cut the waste” by reducing investment and the number of workers and instead encourage firms to pay higher returns to shareholders or hoard cash.

., A Proposal to Limit the Anti-Competitive Power of Institutional Investors. 38. Ronald J. Gilson & Jeffrey N. Gordon, Agency Capitalism: Further Implications of Equity Intermediation 7 (Columbia Law and Economics Working Paper No. 461, 2014). See also Ronald J. Gilson & Jeffrey N. Gordon, The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights, 113 Columbia Law Review 863 (2011). 39. We tread speculatively in this paragraph. The industry is complex, fluid, and poorly understood. 40. See Ali Hortaçsu & Chad Syverson, Product Differentiation, Search Costs, and Competition in the Mutual Fund Industry: A Case Study of S&P 500 Index Funds, 119 Quarterly Journal of Economics 403 (2004); John C.


pages: 345 words: 100,989

The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal by Duncan Mavin

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Adam Neumann (WeWork), air freight, banking crisis, Bernie Madoff, Big Tech, Boeing 737 MAX, Boris Johnson, Brexit referendum, British Empire, carbon footprint, coronavirus, corporate governance, COVID-19, Credit Default Swap, democratizing finance, Donald Trump, Eyjafjallajökull, financial engineering, fixed income, global pandemic, global supply chain, Gordon Gekko, Greensill Capital, high net worth, Kickstarter, lockdown, Long Term Capital Management, low interest rates, Masayoshi Son, means of production, Menlo Park, mittelstand, move fast and break things, NetJets, Network effects, Ponzi scheme, private military company, proprietary trading, remote working, rewilding, Rishi Sunak, rolodex, Silicon Valley, skunkworks, SoftBank, sovereign wealth fund, supply chain finance, Tim Haywood, Vision Fund, WeWork, work culture

The changes were very disruptive. Assets continued to decline as the company shifted strategies. A couple of new businesses that Friedman had acquired were taking too long to integrate and dragged on the company’s earnings. The staffing cuts damaged staff morale, especially in Switzerland. A hostile activist investor had bought a bunch of GAM shares and started jostling for Friedman to go. The share price, which had initially risen in Friedman’s first six months, was soon down by about 50 per cent from its peak. None of that, though, would prove nearly as significant as the affair the company was about to run into.

For Greensill, whose business leaned on Gupta so heavily, that was a major problem too. ELEVEN The Haywood Files Top executives at Global Asset Management were not initially sure what to make of Daniel Sheard’s allegations. In 2017, Alex Friedman and his team were dealing with the hostile activist investor, a broad restructuring plan, poor overall performance and integrating new acquisitions. They didn’t appear to have grasped the seriousness of Sheard’s allegations. Tim Haywood, the firm’s star fund manager, seemed convinced he could make money from the Greensill investments. He even showed them that all was fine by selling a couple of Greensill assets at a profit (though it later turned out that he’d only sold them back to Greensill, and the deals never actually closed anyway).


pages: 366 words: 94,209

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, benefit corporation, bitcoin, blockchain, Burning Man, business process, buy and hold, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, data science, deep learning, disintermediation, diversified portfolio, Dutch auction, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gamification, Garrett Hardin, gentrification, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, independent contractor, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, Large Hadron Collider, loss aversion, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Mitch Kapor, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, power law, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Russell Brand, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, stock buybacks, TaskRabbit, the Cathedral and the Bazaar, The Future of Employment, the long tail, trade route, Tragedy of the Commons, transportation-network company, Turing test, Uber and Lyft, Uber for X, uber lyft, unpaid internship, Vitalik Buterin, warehouse robotics, Wayback Machine, Y Combinator, young professional, zero-sum game, Zipcar

The investments generated jobs, goodwill, and homes, in addition to retirement fund returns for union members.75 Individuals can apply the same principles to their own investments by considering how to leverage the impact of their capital to benefit their own lives. It’s easiest to see and feel that impact by investing in regional companies and projects, big or small. A large corporation’s local activist shareholders can have a disproportionately significant influence on how the company employs, sources, pollutes, and donates. Meanwhile, as distributed technologies allow smaller, more locally connected businesses to leverage people, assets, and trends that larger conglomerates cannot, consider putting your capital right there.


pages: 250 words: 88,762

The Logic of Life: The Rational Economics of an Irrational World by Tim Harford

activist fund / activist shareholder / activist investor, affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, behavioural economics, Berlin Wall, business cycle, colonial rule, company town, Daniel Kahneman / Amos Tversky, double entry bookkeeping, Dr. Strangelove, Edward Glaeser, en.wikipedia.org, endowment effect, European colonialism, experimental economics, experimental subject, George Akerlof, income per capita, invention of the telephone, Jane Jacobs, John von Neumann, Larry Ellison, law of one price, Martin Wolf, mutually assured destruction, New Economic Geography, new economy, Patri Friedman, plutocrats, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, spinning jenny, Steve Jobs, The Death and Life of Great American Cities, the market place, the strength of weak ties, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Tyler Cowen, women in the workforce, zero-sum game

And I’m only one shareholder—how much effort am I really going to put into contacting my fellow shareholders and trying to persuade them to vote down the board? Actually, the situation is worse than that: It’s a game of split the check inside a second game of split the check, because even if I and my fellow activist shareholders do manage to get together and rein in an overly generous board, the immediate result is likely to be a damaging succession crisis at the company. Shareholders of other companies will benefit because other boards will look over their shoulders at our little shareholder revolution and tighten their belts just a little.


pages: 347 words: 91,318

Netflixed: The Epic Battle for America's Eyeballs by Gina Keating

activist fund / activist shareholder / activist investor, AOL-Time Warner, Apollo 13, barriers to entry, Bear Stearns, business intelligence, Carl Icahn, collaborative consumption, company town, corporate raider, digital rights, inventory management, Jeff Bezos, late fees, Mark Zuckerberg, McMansion, Menlo Park, Michael Milken, Netflix Prize, new economy, out of africa, performance metric, Ponzi scheme, pre–internet, price stability, recommendation engine, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Steve Jobs, subscription business, Superbowl ad, tech worker, telemarketer, warehouse automation, X Prize

“Interview: Blockbuster CEO: Skeptics Aside, Confident of Physical’s Digital Future.” paidContent, Aug. 14, 2008. Anderson, Nick. “A New Lesson Plan? Voter Initiative Proposed for Fall Ballot Could Spawn Hundreds More Charter Schools.” Los Angeles Times, Feb. 25, 1998. Antioco, John. “How I Did It: Blockbuster’s Former CEO On Sparring with an Activist Shareholder.” Harvard Business Review, April 2011. Applefield Olson, Catherine. “Online Retailers Slash DVD Prices—Competition Over New Format Heats Up in Cyberspace.” Billboard, May 16, 1998. Arango, Tim. “Time Warner View Netflix as a Fading Star.” New York Times, Dec. 12, 2010. Arnold, Thomas.


pages: 324 words: 93,606

No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy by Linsey McGoey

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, agricultural Revolution, American Legislative Exchange Council, Bear Stearns, bitcoin, Bob Geldof, cashless society, clean water, cognitive dissonance, collapse of Lehman Brothers, colonial rule, corporate governance, corporate social responsibility, crony capitalism, effective altruism, Etonian, Evgeny Morozov, financial innovation, Food sovereignty, Ford paid five dollars a day, germ theory of disease, hiring and firing, Howard Zinn, Ida Tarbell, impact investing, income inequality, income per capita, invisible hand, Jane Jacobs, John Elkington, Joseph Schumpeter, Leo Hollis, liquidationism / Banker’s doctrine / the Treasury view, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, meta-analysis, Michael Milken, microcredit, Mitch Kapor, Mont Pelerin Society, Naomi Klein, Neil Armstrong, obamacare, Peter Singer: altruism, Peter Thiel, plutocrats, price mechanism, profit motive, public intellectual, Ralph Waldo Emerson, rent-seeking, road to serfdom, Ronald Reagan, school choice, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Slavoj Žižek, Steve Jobs, strikebreaker, subprime mortgage crisis, tacit knowledge, technological solutionism, TED Talk, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, urban planning, W. E. B. Du Bois, wealth creators

Aaron Dorfman, executive director of the US National Committee for Responsive Philanthropy, suggested to me that there are three main channels a foundation can adopt in order to practise mission investing: ‘The first ‘is what we call “screens”, so they can screen into or out of their portfolio investments that are consistent or inconsistent with their mission’. The second channel, he said, is ‘shareholder activism … we’ve got a lot of demonstrated cases, especially on environmental concerns where foundations that own shares in certain companies as an activist shareholder have been able to influence the corporate practices of the companies they are invested in and improve their wage policies or their environmental policies’. The third channel is ‘proactive investments that directly relate to the foundation’s mission but also seek a [financial] return … this could be a below market-rate return in which case they would call it a “program-related investment” (PRI), or it could be seeking a regular market-rate return’.


pages: 281 words: 95,852

The Googlization of Everything: by Siva Vaidhyanathan

"Friedman doctrine" OR "shareholder theory", 1960s counterculture, activist fund / activist shareholder / activist investor, AltaVista, barriers to entry, Berlin Wall, borderless world, Burning Man, Cass Sunstein, choice architecture, cloud computing, commons-based peer production, computer age, corporate social responsibility, correlation does not imply causation, creative destruction, data acquisition, death of newspapers, digital divide, digital rights, don't be evil, Firefox, Francis Fukuyama: the end of history, full text search, global pandemic, global village, Google Earth, Great Leap Forward, Howard Rheingold, Ian Bogost, independent contractor, informal economy, information retrieval, John Markoff, Joseph Schumpeter, Kevin Kelly, knowledge worker, libertarian paternalism, market fundamentalism, Marshall McLuhan, means of production, Mikhail Gorbachev, moral panic, Naomi Klein, Network effects, new economy, Nicholas Carr, PageRank, Panopticon Jeremy Bentham, pirate software, radical decentralization, Ray Kurzweil, Richard Thaler, Ronald Reagan, side project, Silicon Valley, Silicon Valley ideology, single-payer health, Skype, Social Responsibility of Business Is to Increase Its Profits, social web, Steven Levy, Stewart Brand, technological determinism, technoutopianism, the long tail, The Nature of the Firm, The Structural Transformation of the Public Sphere, Thorstein Veblen, Tyler Cowen, urban decay, web application, Yochai Benkler, zero-sum game

So when Yahoo revealed his e-mail account information to Chinese authorities, they were able to track Shi as the source of the offending e-mail. Shi was sentenced to ten years in prison in April 2005.30 Once word reached the United States that Yahoo was complicit in the persecution of political dissidents, a furor ensued. Yahoo has faced a lawsuit filed by human rights organizations, widespread criticism among bloggers and activists, shareholder objections, and a grilling by a U.S. congressional committee examining the roles of American companies such as Yahoo, Cisco (which supplies the servers that facilitate much of the surveillance and site blocking in China), and Google. Yahoo, of course, defended its actions by saying that it cannot violate the laws of a country in which it does business, and it cannot be held responsible if its users violate laws.


pages: 160 words: 6,876

Shaky Ground: The Strange Saga of the U.S. Mortgage Giants by Bethany McLean

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Alan Greenspan, Bear Stearns, collateralized debt obligation, crony capitalism, housing crisis, junk bonds, Michael Milken, mortgage debt, negative equity, obamacare, Pershing Square Capital Management, race to the bottom, Savings and loan crisis

Some investors say that they view the lawsuits merely as a wedge to force the door open to what they really want: a recapitalized, albeit heavily reformed, version of Fannie and Freddie, which, they argue, is the right solution for the housing market—as well as one that would increase the value of their stock. This, of course, is precisely what the administration has said it does not want. In the spring of 2014, the hedge fund manager and activist investor Bill Ackman announced that his fund, Pershing Square, had bought 13 percent of the remaining 20 percent of the GSEs’ common stock. Pershing Square also sued the government. But the purchase of common stock is essentially an all-in bet that Fannie and Freddie will be revitalized in some way. In a presentation he called “It’s Time to Get Off Our Fannie,” Ackman laid out a plan for the future of the housing finance system, essentially calling for the return of Fannie and Freddie.


pages: 309 words: 114,984

The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age by Robert Wachter

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Chuck Templeton: OpenTable:, Clayton Christensen, cognitive load, collapse of Lehman Brothers, computer age, creative destruction, crowdsourcing, deep learning, deskilling, disruptive innovation, driverless car, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, general purpose technology, Google Glasses, human-factors engineering, hype cycle, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, Kickstarter, knowledge worker, lifelogging, Marc Benioff, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, peer-to-peer, personalized medicine, pets.com, pneumatic tube, Productivity paradox, Ralph Nader, RAND corporation, Richard Hendricks, Robert Solow, Salesforce, Second Machine Age, self-driving car, seminal paper, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, TED Talk, The future is already here, the payments system, The Wisdom of Crowds, Thomas Bayes, Toyota Production System, Uber for X, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, Yogi Berra

But Epic sales remain brisk, and, at least in its core market, the company continues to receive a steady stream of new customers who are dissatisfied with their current EHRs. Because he runs a publicly traded company, Jonathan Bush is subject to a different kind of pressure than Epic is. In May 2014, activist investor David Einhorn, the billionaire CEO of Greenlight Capital, went after both Bush and athena in a speech at a large investor conference. After observing that athena had an outlandish price/earnings ratio, had failed to meet several financial performance expectations, and faces a series of major business challenges in coming years (the loss of the HITECH money and the lack of a viable inpatient system, to name a couple), Einhorn predicted that athena’s stock would tumble by 80 percent in relatively short order, in a classic bursting of a Wall Street “bubble.”

Adams resigned from the company two months after making these comments. 231 In February, 2015, athena and John Halamka’s S. Mace. “Athenahealth, BIDMC Ink Development Deal,” HealthLeaders Media, February 3, 2015. 232 Don Berwick, former head of Medicare Quoted in A. Gawande, “The Velluvial Matrix,” New Yorker, June 16, 2010. 232 In May 2014, activist investor David Einhorn Lopez and Penn, “Read David Einhorn’s Brutal Presentation.” Bush rebutted Einhorn in J. Wieczner, “Bush vs. Einhorn: How athenahealth’s CEO Met His Short-Seller,” Fortune, May 28, 2014. Chapter 25: Silicon Valley Meets Healthcare 235 “For thousands of years, guys like us” “Minimum Viable Product,” Silicon Valley (television series), HBO, 2014. 235 “Our investment convinced the IT world” Interview of David Blumenthal by the author, July 16, 2014. 236 “Health IT Sees First Billion Dollar Quarter” A.


pages: 414 words: 117,581

Binge Times: Inside Hollywood's Furious Billion-Dollar Battle to Take Down Netflix by Dade Hayes, Dawn Chmielewski

activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, Amazon Web Services, AOL-Time Warner, Apollo 13, augmented reality, barriers to entry, Big Tech, borderless world, cloud computing, cognitive dissonance, content marketing, coronavirus, corporate raider, COVID-19, data science, digital rights, Donald Trump, Downton Abbey, Elon Musk, George Floyd, global pandemic, Golden age of television, haute cuisine, hockey-stick growth, invention of the telephone, Jeff Bezos, John Markoff, Jony Ive, late fees, lockdown, loose coupling, Marc Andreessen, Mark Zuckerberg, Mitch Kapor, Netflix Prize, Osborne effect, performance metric, period drama, Phoebe Waller-Bridge, QR code, reality distortion field, recommendation engine, remote working, Ronald Reagan, Salesforce, Saturday Night Live, Silicon Valley, skunkworks, Skype, Snapchat, social distancing, Steve Jobs, subscription business, tech bro, the long tail, the medium is the message, TikTok, Tim Cook: Apple, vertical integration, WeWork

“The sheer size and quality of the content tsunami headed to Disney+ was mind-blowing and frightening to any sub-scale company thinking about competing in the scripted entertainment space,” wrote entertainment analyst Michael Nathanson. Case in point was the Christmas Day premiere of Pixar’s Soul. Activist investor Daniel Loeb had been pressuring Disney to debut more of its movies on Disney+, following on the summer’s success of the digital Hamilton premiere. The animated film, Pixar’s first to feature a Black protagonist, racked up more streaming minutes than The Office and the second-season finale of The Mandalorian, according to Nielsen.

Three days after a largely flattering profile appeared in the Wall Street Journal, in which Kilar defended his decision to upend century-old business practices to build a successful streaming service, Kilar found himself on the outside looking in on a $43 billion deal to spin off WarnerMedia. Mired in debt and under pressure from an activist investor, AT&T announced it would merge its media group with Discovery, whose veteran CEO, David Zaslav, would lead the combined entity. Kilar, who’d received a stock award valued at nearly $50 million for leading WarnerMedia’s streaming initiative, would seemingly have no role. Hollywood brimmed with schadenfreude for an executive known for smiling in your face while depositing a time bomb in your lap.


pages: 376 words: 109,092

Paper Promises by Philip Coggan

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Alan Greenspan, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , Bretton Woods, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, carried interest, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, delayed gratification, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, falling living standards, fear of failure, financial innovation, financial repression, fixed income, floating exchange rates, full employment, German hyperinflation, global reserve currency, Goodhart's law, Greenspan put, hiring and firing, Hyman Minsky, income inequality, inflation targeting, Isaac Newton, John Meriwether, joint-stock company, junk bonds, Kenneth Rogoff, Kickstarter, labour market flexibility, Les Trente Glorieuses, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, market clearing, Martin Wolf, Minsky moment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, negative equity, Nick Leeson, Northern Rock, oil shale / tar sands, paradox of thrift, peak oil, pension reform, plutocrats, Ponzi scheme, price stability, principal–agent problem, purchasing power parity, quantitative easing, QWERTY keyboard, railway mania, regulatory arbitrage, reserve currency, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, Suez crisis 1956, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, time value of money, too big to fail, trade route, tulip mania, value at risk, Washington Consensus, women in the workforce, zero-sum game

Indeed companies were criticized for holding ‘idle’ cash. Academics argued that companies should put the money to work, by making acquisitions or investing in new factories, or they should return it to shareholders who could then invest the money in a company with more attractive growth potential. Activist shareholders often demanded that executives should adopt such policies. In theory, companies could finance themselves entirely with equity (cash raised from shareholders who would never be repaid), with debt, or with some combination of the two. The academics suggested that, other things being equal, the exact mix was irrelevant to the value of a company.


pages: 1,009 words: 329,520

The Last Tycoons: The Secret History of Lazard Frères & Co. by William D. Cohan

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist fund / activist shareholder / activist investor, Alan Greenspan, AOL-Time Warner, bank run, Bear Stearns, book value, Carl Icahn, carried interest, cognitive dissonance, commoditize, computer age, corporate governance, corporate raider, creative destruction, credit crunch, deal flow, diversification, Donald Trump, East Village, fear of failure, financial engineering, fixed income, G4S, Glass-Steagall Act, hiring and firing, interest rate swap, intermodal, Joseph Schumpeter, junk bonds, land bank, late fees, Long Term Capital Management, Marc Andreessen, market bubble, Michael Milken, offshore financial centre, Ponzi scheme, proprietary trading, Ralph Nader, Ralph Waldo Emerson, rolodex, Ronald Reagan, shareholder value, short squeeze, SoftBank, stock buybacks, The Nature of the Firm, the new new thing, Yogi Berra

This rather straightforward warning shot from Michel came a day before the scheduled board meetings to approve the $3.2 billion merger between two of Lazard's cascade of holding companies, Eurazeo and Rue Imperiale, which had been announced in November 2003. The merger was the final step in a four-year process designed to simplify Lazard's byzantine ownership structure and came about chiefly as a result of the ongoing efforts of Jon Wood at UBS, the activist shareholder. After the merger with Rue Imperiale, Eurazeo would become, essentially, a large publicly traded private-equity fund. Together, Michel and the onetime Lazard suitor Credit Agricole would control 54 percent of the voting rights of Eurazeo. Michel had a huge influence on Patrick Sayer, the forty-seven-year-old Eurazeo CEO.

Bruce's brief and embarrassing high-profile gambit on Icahn's behalf had revealed just how far the "new Lazard" had strayed from the subtle and powerful shadowy operator that had long comprised the firm's complex genome. "For reasons that remain inexplicable," Andrew Ross Sorkin wrote in the Times after the compromise had been reached, "Mr. Wasserstein assumed the role of activist investor himself." Sorkin then canvassed Wall Street opinion to see how much reputational damage Bruce and Lazard had suffered, especially since only a month before Bruce had told Sorkin he considered himself "the trustee for the future" of Lazard. "Had he won, it would have been a different story," Sorkin discovered.


pages: 483 words: 141,836

Red-Blooded Risk: The Secret History of Wall Street by Aaron Brown, Eric Kim

Abraham Wald, activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, Asian financial crisis, Atul Gawande, backtesting, Basel III, Bayesian statistics, Bear Stearns, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Black Swan, book value, business cycle, capital asset pricing model, carbon tax, central bank independence, Checklist Manifesto, corporate governance, creative destruction, credit crunch, Credit Default Swap, currency risk, disintermediation, distributed generation, diversification, diversified portfolio, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, experimental subject, fail fast, fear index, financial engineering, financial innovation, global macro, illegal immigration, implied volatility, independent contractor, index fund, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, managed futures, margin call, market clearing, market fundamentalism, market microstructure, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, natural language processing, open economy, Pierre-Simon Laplace, power law, pre–internet, proprietary trading, quantitative trading / quantitative finance, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, shareholder value, Sharpe ratio, special drawing rights, statistical arbitrage, stochastic volatility, stock buybacks, stocks for the long run, tail risk, The Myth of the Rational Market, Thomas Bayes, too big to fail, transaction costs, value at risk, yield curve

Unfortunately, it took four years to get the idea past the SEC, and I had to go all the way up to the commissioners themselves. I don’t blame them; this idea touched on a lot of hot-button issues. The commissioners and staff were suspicious of a concentrated portfolio, aghast at Internet stock message boards, and nervous about activist investors. But at no time did I run into bureaucratic indifference or rigidity. I had open and productive discussions with many staff members, who also did a ton of free legal work for me. Once we did open, the SEC stood by us on several important occasions, which saved us from being either regulated or sued out of existence.

I had a ton of fun and could afford the loss. I met some good people and learned a lot. eRaider.com got a lot of great press, even if people were inclined to put us in stories with an astrologer, a preteen penny stock hyper, and a mutual fund that put a webcam in its trading room. Even more annoying: Every activist investor, regardless of amount of investment or seriousness, is described in every news article as a “gadfly.” Anyway, for the present purposes the eRaider.com story proves that I actually believe this small portfolio stuff. As I said at the beginning of this section, my point is not that the IGT CAPM is better than MPT CAPM, or even whether there’s any truth to it at all.


pages: 444 words: 127,259

Super Pumped: The Battle for Uber by Mike Isaac

"Susan Fowler" uber, "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, always be closing, Amazon Web Services, Andy Kessler, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Bay Area Rapid Transit, Benchmark Capital, Big Tech, Burning Man, call centre, Cambridge Analytica, Chris Urmson, Chuck Templeton: OpenTable:, citizen journalism, Clayton Christensen, cloud computing, corporate governance, creative destruction, data science, Didi Chuxing, don't be evil, Donald Trump, driverless car, Elon Musk, end-to-end encryption, fake news, family office, gig economy, Google Glasses, Google X / Alphabet X, Greyball, Hacker News, high net worth, hockey-stick growth, hustle culture, impact investing, information security, Jeff Bezos, John Markoff, John Zimmer (Lyft cofounder), Kevin Roose, Kickstarter, Larry Ellison, lolcat, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Masayoshi Son, mass immigration, Menlo Park, Mitch Kapor, money market fund, moral hazard, move fast and break things, Network effects, new economy, off grid, peer-to-peer, pets.com, Richard Florida, ride hailing / ride sharing, Salesforce, Sand Hill Road, self-driving car, selling pickaxes during a gold rush, shareholder value, Shenzhen special economic zone , Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley startup, skunkworks, Snapchat, SoftBank, software as a service, software is eating the world, South China Sea, South of Market, San Francisco, sovereign wealth fund, special economic zone, Steve Bannon, Steve Jobs, stock buybacks, super pumped, TaskRabbit, tech bro, tech worker, the payments system, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, ubercab, union organizing, upwardly mobile, Vision Fund, WeWork, Y Combinator

., https://twitter.com/megwhitman/status/890754932990763008. 315 the firm filed a lawsuit: Mike Isaac, “Uber Investor Sues Travis Kalanick for Fraud,” New York Times, August 10, 2017, https://www.nytimes.com/2017/08/10/technology/travis-kalanick-uber-lawsuit-benchmark-capital.html. 315 “We do not feel it was either prudent”: Mike Isaac, “Kalanick Loyalists Move to Force Benchmark Off Uber’s Board,” New York Times, August 11, 2017, https://www.nytimes.com/2017/08/11/technology/uber-benchmark-pishevar.html. 317 He bankrolled his college years: Cyrus Farivar, “How Sprint’s New Boss Lost $70 Billion of His Own Cash (and Still Stayed Rich),” Ars Technica, October 16, 2012, https://arstechnica.com/information-technology/2012/10/how-sprints-new-boss-lost-70-billion-of-his-own-cash-and-still-stayed-rich/. 317 He returned to Japan: Andrew Ross Sorkin, “A Key Figure in the Future of Yahoo,” Dealbook, New York Times, December 13, 2010, https://dealbook.nytimes.com/2010/12/13/a-key-figure-in-the-future-of-yahoo/. 317 “crazy guy who bet on the future”: Walter Sim, “SoftBank’s Masayoshi Son, the ‘Crazy Guy Who Bet on the Future,’ ” Straits Times, December 12, 2016, https://www.straitstimes.com/asia/east-asia/softbanks-masayoshi-son-the-crazy-guy-who-bet-on-the-future. 317 He designed the investment vehicle for speed: Dana Olsen, “Vision Fund 101: Inside SoftBank’s $98B Vehicle,” PitchBook, August 2, 2017, https://pitchbook.com/news/articles/vision-fund-101-inside-softbanks-93b-vehicle. Chapter 31: THE GRAND BARGAIN 319 The storied corporation had lost: Steve Blank, “Why GE’s Jeff Immelt Lost His Job: Disruption and Activist Investors,” Harvard Business Review, October 30, 2017, https://hbr.org/2017/10/why-ges-jeff-immelt-lost-his-job-disruption-and-activist-investors. 320 “There’s this chip you have”: Sheelah Kolhatkar, “At Uber, A New C.E.O. Shifts Gears,” The New Yorker, April 9, 2018, https://www.newyorker.com/magazine/2018/04/09/at-uber-a-new-ceo-shifts-gears. 320 After Allen & Company: https://www.newyorker.com/magazine/2018/04/09/at-uber-a-new-ceo-shifts-gears. 324 “I have decided not to pursue”: Jeff Immelt (@JeffImmelt), “I have decided not to pursue a leadership position at Uber.


pages: 460 words: 130,820

The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Eliot Brown, Maureen Farrell

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Adam Neumann (WeWork), Airbnb, AOL-Time Warner, asset light, Bear Stearns, Bernie Madoff, Burning Man, business logic, cloud computing, coronavirus, corporate governance, COVID-19, Didi Chuxing, do what you love, don't be evil, Donald Trump, driverless car, East Village, Elon Musk, financial engineering, Ford Model T, future of work, gender pay gap, global pandemic, global supply chain, Google Earth, Gordon Gekko, greed is good, Greensill Capital, hockey-stick growth, housing crisis, index fund, Internet Archive, Internet of things, Jeff Bezos, John Zimmer (Lyft cofounder), Larry Ellison, low interest rates, Lyft, Marc Benioff, Mark Zuckerberg, Masayoshi Son, Maui Hawaii, Network effects, new economy, PalmPilot, Peter Thiel, pets.com, plant based meat, post-oil, railway mania, ride hailing / ride sharing, Robinhood: mobile stock trading app, rolodex, Salesforce, San Francisco homelessness, Sand Hill Road, self-driving car, sharing economy, Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley startup, smart cities, Snapchat, SoftBank, software as a service, sovereign wealth fund, starchitect, Steve Jobs, subprime mortgage crisis, super pumped, supply chain finance, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, vertical integration, Vision Fund, WeWork, women in the workforce, work culture , Y Combinator, Zenefits, Zipcar

Investors simply couldn’t buy into Son’s plans for a repeat of the same playbook. Whatever personal sway he had with Crown Prince Mohammed bin Salman, it wasn’t enough. Despite announcing $108 billion in commitments the prior year, little if any of that was binding. Yet Son’s troubles weren’t over. An activist investor, Elliott Management, took a big stake in SoftBank and began pressuring SoftBank to sell more of its assets—to spend more money boosting the stock through buybacks rather than pouring money into startups. Another dagger came from COVID-19. The onset of the pandemic sent the ride-hailing market into a tailspin, reversing an early 2020 rally in Uber’s shares.

Layoffs swept like a virus: Josh Constine, “Layoffs Hit Flexport, Another SoftBank-Backed Startup Worth $3.2B,” TechCrunch, Feb. 4, 2020. OYO, the hotel company: Vindu Goel, Karan Deep Singh, and Erin Griffith, “Oyo Scales Back as SoftBank-Funded Companies Retreat,” New York Times, Jan. 13, 2020. An activist investor, Elliott Management: Jenny Strasburg and Bradley Hope, “Elliott Management Builds More Than $2.5 Billion Stake in SoftBank,” Wall Street Journal, Feb. 6, 2020. “the valley of the coronavirus”: “Earnings Results Briefing for FY2019,” SoftBank Group, May 20, 2020, group.softbank/​en/​news/​webcast/​20200518_01.


pages: 521 words: 136,802

Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy by James B Stewart, Rachel Abrams

activist fund / activist shareholder / activist investor, AOL-Time Warner, Apple's 1984 Super Bowl advert, Bear Stearns, Bernie Madoff, Black Lives Matter, company town, compensation consultant, corporate governance, corporate raider, Donald Trump, estate planning, high net worth, Jeff Bezos, junk bonds, Mark Zuckerberg, medical residency, Michael Milken, power law, shareholder value, Silicon Valley, Steve Jobs, stock buybacks, Tim Cook: Apple, vertical integration, éminence grise

* * * — Herzer’s lawsuit, with its devastating assertions about Sumner’s physical and mental decline, coupled with his conspicuous absences at recent shareholder meetings and presentations—not to mention the millions CBS and Viacom were still paying Sumner—caught the attention of Wall Street. With a controlling shareholder like Sumner, activist investors had shown little interest in Viacom. In the wake of the lawsuit, that changed. Even Sumner’s handpicked directors had a fiduciary duty to all shareholders. At an investor conference in December hosted by Reuters, the influential media investor and major Viacom shareholder Mario Gabelli asked about Sumner, “Is he or isn’t he in the position where he should be chairman emeritus or something?”

At an investor conference in December hosted by Reuters, the influential media investor and major Viacom shareholder Mario Gabelli asked about Sumner, “Is he or isn’t he in the position where he should be chairman emeritus or something?” Salvatore Muoio, another major Viacom shareholder, echoed the sentiment: “If Sumner is no longer fit to lead the board, then he should give up that role.” Eric Jackson, managing director of SpringOwl Asset Management, an activist investor with a stake in Viacom, attracted widespread publicity in January after he posted on the internet a slideshow with a devastating critique of Viacom’s leadership. Jackson called Viacom “creatively bankrupt.” He compared the situation with Sumner to Weekend at Bernie’s, a comedy in which two young executives prop up their dead boss so they can enjoy a weekend at his Hamptons estate.


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, bank run, banks create money, Basel III, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, clean tech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, Evgeny Morozov, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Glass-Steagall Act, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, independent contractor, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, John Bogle, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, margin call, Mark Zuckerberg, market bubble, means of production, military-industrial complex, Minsky moment, Money creation, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, Post-Keynesian economics, profit maximization, proprietary trading, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Robert Solow, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, Solyndra, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two and twenty, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, you are the product, zero-sum game

But it is no accident that among the primary beneficiaries of share buy-backs are managers with generous share option schemes as part of their remuneration packages - the same managers who implement the share buy-back programmes. In 2012, for example, Apple announced a share buy-back programme of up to a staggering $100 billion, partly to ward off ‘activist' shareholders demanding that the company return cash to them to ‘unlock shareholder value'.7 Rather than reinvest in the business, Apple preferred to transfer cash to shareholders. The alchemy of the takers versus the makers that Big Bill Haywood referred to back in the 1920s continues today. COMMON CRITIQUES OF VALUE EXTRACTION The vital but often muddled distinction between value extraction and value creation has consequences far beyond the fate of companies and their workers, or even of whole societies.


pages: 390 words: 114,538

Digital Wars: Apple, Google, Microsoft and the Battle for the Internet by Charles Arthur

activist fund / activist shareholder / activist investor, AltaVista, Andy Rubin, Build a better mousetrap, Burning Man, cloud computing, commoditize, credit crunch, crowdsourcing, disintermediation, don't be evil, en.wikipedia.org, Firefox, gravity well, Jeff Bezos, John Gruber, Mark Zuckerberg, Menlo Park, Network effects, PageRank, PalmPilot, pre–internet, Robert X Cringely, Silicon Valley, Silicon Valley startup, skunkworks, Skype, slashdot, Snapchat, software patent, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Susan Wojcicki, the long tail, the new new thing, the scientific method, Tim Cook: Apple, Tony Fadell, turn-by-turn navigation, upwardly mobile, vertical integration

Google made its money through advertising, largely linked to its search engine. In that sense, none had really changed in 15 years. There were other similarities: only Google retained the same chief executive. Jobs had been replaced by Tim Cook. Ballmer was on his way out, the victim of a board-level putsch led by activist shareholders unhappy that Microsoft’s stock value had barely risen for a decade. His replacement, Satya Nadella, 46, had a background in enterprise and cloud services – and 22 years at the company. The certainties of the past – that the horizontal model must always succeed – were less clear. Android had so far won the battle to be the most-used smartphone platform; though with global use of smartphones estimated at just 20 per cent by the end of 2013 (because there are so many in the developing world which had not yet been catered for) the possibility remained that another ‘open’ OS – such as FirefoxOS, from the Mozilla foundation – could rise up and serve the next few billion buyers.


pages: 453 words: 114,250

The Great Firewall of China by James Griffiths;

A Declaration of the Independence of Cyberspace, activist fund / activist shareholder / activist investor, Albert Einstein, anti-communist, bike sharing, bitcoin, Black Lives Matter, borderless world, call centre, Cambridge Analytica, Chelsea Manning, Citizen Lab, Deng Xiaoping, digital divide, digital rights, disinformation, don't be evil, Donald Trump, Edward Snowden, end-to-end encryption, Evgeny Morozov, fake news, gig economy, Great Leap Forward, high-speed rail, jimmy wales, John Gilmore, John Perry Barlow, Mark Zuckerberg, megacity, megaproject, microaggression, Mikhail Gorbachev, Mitch Kapor, mobile money, Occupy movement, pets.com, profit motive, QR code, race to the bottom, RAND corporation, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, Silicon Valley startup, Skype, Snapchat, South China Sea, Steve Jobs, Stewart Brand, Stuxnet, technoutopianism, The future is already here, undersea cable, WikiLeaks, zero day

Lee had borne the brunt of the fights with the government, often dragged into meetings to be berated by high-ranking officials and subjected to a highly publicised and intrusive personal tax audit.10 At the same time, he felt a lack of support from company headquarters in Mountain View, where executives, especially co-founder Sergey Brin, were growing sceptical of the many compromises Google was making to stay in China. In 2008, activist shareholders put forward two proposals critical of censorship and Google’s collaboration with repressive regimes. These were easily defeated, but Brin abstained from the votes, and said afterwards that he agreed “with the spirit of both of these, particularly in human rights, freedom of expression, and freedom to receive information”.11 During a personal trip to Asia in mid-2009, just as the Google China team needed the most support, Brin and fellow co-founder Larry Page dropped in on the company’s Tokyo offices, but stayed well clear of Beijing.


pages: 356 words: 116,083

For Profit: A History of Corporations by William Magnuson

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, bank run, banks create money, barriers to entry, Bear Stearns, Big Tech, Black Lives Matter, blockchain, Bonfire of the Vanities, bread and circuses, buy low sell high, carbon tax, carried interest, collective bargaining, Cornelius Vanderbilt, corporate raider, creative destruction, disinformation, Donald Trump, double entry bookkeeping, Exxon Valdez, fake news, financial engineering, financial innovation, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Ida Tarbell, Intergovernmental Panel on Climate Change (IPCC), invisible hand, joint-stock company, joint-stock limited liability company, junk bonds, Mark Zuckerberg, Menlo Park, Michael Milken, move fast and break things, Peter Thiel, power law, price discrimination, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, randomized controlled trial, ride hailing / ride sharing, scientific management, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, slashdot, Snapchat, South Sea Bubble, spice trade, Steven Levy, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tim Cook: Apple, too big to fail, trade route, transcontinental railway, union organizing, work culture , Y Combinator, Yom Kippur War, zero-sum game

The invisible hand needs a corrective here. This is not to say that there aren’t hard issues involving shareholders. Shareholders are entitled to a share of the profits that corporations make, but how much? If raising the wages of employees will reduce dividends, who should win? How should corporations deal with activist shareholders who seek to make a quick profit by flipping the corporation’s shares? There are no easy answers here, and reasonable minds can disagree about the best solutions. A wise executive understands the role of shareholders in making the corporation thrive. He does not have to cave in to their every demand.


pages: 177 words: 54,421

Ego Is the Enemy by Ryan Holiday

activist fund / activist shareholder / activist investor, Airbnb, Ben Horowitz, Berlin Wall, Bernie Madoff, Burning Man, delayed gratification, Google Glasses, growth hacking, Jeff Bezos, Joan Didion, Lao Tzu, Paul Graham, Ponzi scheme, Ralph Waldo Emerson, Richard Feynman, side project, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, Streisand effect, sunk-cost fallacy, TED Talk, Upton Sinclair

Typically, during printing strikes competitors will help fellow papers out with their printing but Graham’s competitors refused, costing the Post $300,000 a day in advertising revenue. Then, a suite of major investors began to sell their stock positions in the Washington Post Company, ostensibly having lost their faith in its prospects. Graham, pushed by the activist investor she’d met with earlier, decided her best option was to spend an enormous amount of the company’s money to buy back its own shares on the public markets—a dangerous move that almost no one was doing at the time. That’s a list of problems exhausting to read about let alone live through. Yet because of Graham’s perseverance, it shook out better than anyone could have possibly predicted.


pages: 180 words: 55,805

The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future by Jeff Booth

3D printing, Abraham Maslow, activist fund / activist shareholder / activist investor, additive manufacturing, AI winter, Airbnb, Albert Einstein, AlphaGo, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, basic income, bitcoin, blockchain, Bretton Woods, business intelligence, butterfly effect, Charles Babbage, Claude Shannon: information theory, clean water, cloud computing, cognitive bias, collapse of Lehman Brothers, Computing Machinery and Intelligence, corporate raider, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, dark matter, deep learning, DeepMind, deliberate practice, digital twin, distributed ledger, Donald Trump, Elon Musk, fiat currency, Filter Bubble, financial engineering, full employment, future of work, game design, gamification, general purpose technology, Geoffrey Hinton, Gordon Gekko, Great Leap Forward, Hyman Minsky, hype cycle, income inequality, inflation targeting, information asymmetry, invention of movable type, Isaac Newton, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, late fees, low interest rates, Lyft, Maslow's hierarchy, Milgram experiment, Minsky moment, Modern Monetary Theory, moral hazard, Nelson Mandela, Network effects, Nick Bostrom, oil shock, OpenAI, pattern recognition, Ponzi scheme, quantitative easing, race to the bottom, ride hailing / ride sharing, self-driving car, software as a service, technoutopianism, TED Talk, the long tail, the scientific method, Thomas Bayes, Turing test, Uber and Lyft, uber lyft, universal basic income, winner-take-all economy, X Prize, zero-sum game

We have looked at many examples of companies that didn’t make the right bet, including Kodak, Blockbuster, and Sears. Microsoft might prove to be an example of a success in transition, but for every Microsoft, there is a graveyard of companies that couldn’t or wouldn’t make the transition. Ironically, one of the reasons Microsoft was able to make that step was because ValueAct Capital, an activist investor, took board seats, understanding the need to support management in its longer-term thinking to allow the transition. The data is clear in companies, where the cost of not investing in the future is death, but what about some of our biggest institutions that we do not allow to fail? Specifically, the ones like education, healthcare, government.


pages: 394 words: 124,743

Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry by Steven Rattner

activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, bank run, banking crisis, Bear Stearns, business cycle, Carl Icahn, centre right, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, creative destruction, credit crunch, David Brooks, David Ricardo: comparative advantage, declining real wages, Ford Model T, friendly fire, hiring and firing, income inequality, Joseph Schumpeter, low skilled workers, McMansion, Mikhail Gorbachev, moral hazard, Ronald Reagan, Saturday Night Live, shareholder value, subprime mortgage crisis, supply-chain management, too big to fail

GE had Welch, and Westinghouse had a series of mediocre CEOs. In years of occasionally interacting with GE, I never failed to be amazed by the difference that one man made. Disney's is a similar story. In 1984, it looked much like GM two decades later: foundering with an inadequate CEO and under attack from activist shareholders. To achieve peace, Disney brought in the Bass brothers as investors, who recruited Michael Eisner and Frank Wells to the top jobs. I had just joined Morgan Stanley, which was representing the company, and none of us would have bought Disney stock on a bet. We saw no way that it could be rejuvenated.


Hedgehogging by Barton Biggs

activist fund / activist shareholder / activist investor, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Big Tech, book value, Bretton Woods, British Empire, business cycle, buy and hold, diversification, diversified portfolio, eat what you kill, Elliott wave, family office, financial engineering, financial independence, fixed income, full employment, global macro, hiring and firing, index fund, Isaac Newton, job satisfaction, junk bonds, low interest rates, margin call, market bubble, Mary Meeker, Mikhail Gorbachev, new economy, oil shale / tar sands, PalmPilot, paradox of thrift, Paul Samuelson, Ponzi scheme, proprietary trading, random walk, Reminiscences of a Stock Operator, risk free rate, Ronald Reagan, secular stagnation, Sharpe ratio, short selling, Silicon Valley, transaction costs, upwardly mobile, value at risk, Vanguard fund, We are all Keynesians now, zero-sum game, éminence grise

No one has a keener mind for identifying companies whose stocks are incorrectly priced. He has four or five analysts who do the legwork, but Greg himself visits every company he has a position in, talks with—no, interrogates, grills—every CEO, and puts each company under his personal analytical microscope. If he buys the stock, he is an activist shareholder, and his letters to management, when they fail to deliver, are constructive but severe. If management doesn’t respond, the letters become threatening. God forbid that management lies to Greg about a material event. One company did, and he reported it to Spitzer and testified against them. Conversely, if he is short a stock, he is not silent about telling one and all the flaws and foibles.


pages: 202 words: 58,823

Willful: How We Choose What We Do by Richard Robb

activist fund / activist shareholder / activist investor, Alvin Roth, Asian financial crisis, asset-backed security, Bear Stearns, behavioural economics, Bernie Madoff, Brexit referendum, capital asset pricing model, cognitive bias, collapse of Lehman Brothers, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, delayed gratification, diversification, diversified portfolio, effective altruism, endowment effect, Eratosthenes, experimental subject, family office, George Akerlof, index fund, information asymmetry, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, lake wobegon effect, loss aversion, market bubble, market clearing, money market fund, Paradox of Choice, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, Philippa Foot, principal–agent problem, profit maximization, profit motive, Richard Thaler, search costs, Silicon Valley, sovereign wealth fund, survivorship bias, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, trolley problem, ultimatum game

She somehow managed to encourage me while delivering the message: it’s still not good enough. I would jump in the river to save her any day. Index Abraham (biblical figure), 117–118 abstraction, 12, 140–143, 196–197, 206–207 acting in character, 49–66, 94–95, 203 acting out of character, 19, 26, 68–69, 72–74, 97, 114, 122 activist investors, 66 actuarial tables, 163 Akerlof, George A., 210–211n2 Alexander the Great, 140, 180–181 alienation, 205, 207 alpha, 75 altruism, 4 apparently irrational, 28–29, 206 care altruism, 38, 104, 108–114, 115, 120, 135, 201 effective, 110–112, 126, 130, 135–136 in for-itself model, 19, 104, 123, 129 love altruism, 104, 116, 123–125, 203 manners and ethics in, 104, 106–108, 135 observed care altruism, 108–112 purposeful choice compatible with, 104, 113–114, 115–116 selfish, 104, 105–106, 109, 123, 125, 135 types of, 104, 123, 130 utility maximized by, 5–6 vaccination as, 59.


pages: 689 words: 134,457

When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm by Walt Bogdanich, Michael Forsythe

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Alistair Cooke, Amazon Web Services, An Inconvenient Truth, asset light, asset-backed security, Atul Gawande, Bear Stearns, Boris Johnson, British Empire, call centre, Cambridge Analytica, carbon footprint, Citizen Lab, cognitive dissonance, collective bargaining, compensation consultant, coronavirus, corporate governance, corporate social responsibility, Corrections Corporation of America, COVID-19, creative destruction, Credit Default Swap, crony capitalism, data science, David Attenborough, decarbonisation, deindustrialization, disinformation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, double entry bookkeeping, facts on the ground, failed state, financial engineering, full employment, future of work, George Floyd, Gini coefficient, Glass-Steagall Act, global pandemic, illegal immigration, income inequality, information security, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, job-hopping, junk bonds, Kenneth Arrow, Kickstarter, load shedding, Mark Zuckerberg, megaproject, Moneyball by Michael Lewis explains big data, mortgage debt, Multics, Nelson Mandela, obamacare, offshore financial centre, old-boy network, opioid epidemic / opioid crisis, profit maximization, public intellectual, RAND corporation, Rutger Bregman, scientific management, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, smart cities, smart meter, South China Sea, sovereign wealth fund, tech worker, The future is already here, The Nature of the Firm, too big to fail, urban planning, WikiLeaks, working poor, Yogi Berra, zero-sum game

In 2018 the property and casualty industry paid out $365.9 billion in claims, spending $64.6 billion in processing fees, meaning insurers on average spent about 17 percent of what they paid out for administration expenses. By the 1990s, with McKinsey-led financialization sweeping the economy and ever-increasing pressure from activist shareholders for companies to boost profits, the firm pushed a big new idea to its clients: reducing the amount paid out in claims. In McKinsey-speak: “After years of squeezing the cost side, management recognized huge opportunities to rebalance and invested cautiously in LAE to capture indemnity savings.”


pages: 1,042 words: 266,547

Security Analysis by Benjamin Graham, David Dodd

activist fund / activist shareholder / activist investor, asset-backed security, backtesting, barriers to entry, Bear Stearns, behavioural economics, book value, business cycle, buy and hold, capital asset pricing model, Carl Icahn, carried interest, collateralized debt obligation, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, diversification, diversified portfolio, fear of failure, financial engineering, financial innovation, fixed income, flag carrier, full employment, Greenspan put, index fund, intangible asset, invisible hand, Joseph Schumpeter, junk bonds, land bank, locking in a profit, Long Term Capital Management, low cost airline, low interest rates, Michael Milken, moral hazard, mortgage debt, Myron Scholes, prudent man rule, Right to Buy, risk free rate, risk-adjusted returns, risk/return, secular stagnation, shareholder value, stock buybacks, The Chicago School, the market place, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, zero-coupon bond

In the present era of aggressive corporate financial engineering, managers have many levers at their disposal to positively impact returns, including share repurchases, prudent use of leverage, and a valuation-based approach to acquisitions. Managers who are unwilling to make shareholder-friendly decisions risk their companies becoming perceived as “value traps”: inexpensively valued, but ultimately poor investments, because the assets are underutilized. Such companies often attract activist investors seeking to unlock this trapped value. Even more difficult, investors must decide whether to take the risk of investing—at any price—with management teams that have not always done right by shareholders. Shares of such companies may sell at steeply discounted levels, but perhaps the discount is warranted; value that today belongs to the equity holders may tomorrow have been spirited away or squandered.

But the cash doesn’t do the shareholder any good unless management makes smart investments with it, or returns it to its owners via dividends or share buybacks. Management talent and intentions are crucial. Sometimes there is just too much cash to ignore, even if it is under the control of folks who won’t invest it or distribute it. In those cases activist investors often take large stakes and pressure managers to “unlock the value” in the company; failing that, they try to replace those managers. One way or another, if there’s enough money in the cash register, somebody will find a way to get it out. Chapter 27 THE THEORY OF COMMON- STOCK INVESTMENT Copyright © 2009 by The McGraw-Hill Companies, Inc.

That tells you the assets are not being used to full advantage by management. Here, the critical factor for value investors is the prospect of some catalyst that will alter either the behavior or identity of current management. Graham and Dodd were aware of this although they were not cognizant of the range of interventions available to activist investors today. A second possibility is that earnings power may exceed the asset value of a company. To maintain those superior profits, there needs to be some economic factors to protect the firm from competition. Today, these factors are referred to as “moats,” franchises, barriers to entry, or competitive advantages.


pages: 195 words: 63,455

Damsel in Distressed: My Life in the Golden Age of Hedge Funds by Dominique Mielle

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist fund / activist shareholder / activist investor, airline deregulation, Alan Greenspan, banking crisis, Bear Stearns, Black Monday: stock market crash in 1987, blood diamond, Boris Johnson, British Empire, call centre, capital asset pricing model, Carl Icahn, centre right, collateralized debt obligation, Cornelius Vanderbilt, coronavirus, COVID-19, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Elon Musk, Eugene Fama: efficient market hypothesis, family office, fear of failure, financial innovation, fixed income, full employment, glass ceiling, high net worth, hockey-stick growth, index fund, intangible asset, interest rate swap, John Meriwether, junk bonds, Larry Ellison, lateral thinking, Long Term Capital Management, low interest rates, managed futures, mega-rich, merger arbitrage, Michael Milken, Myron Scholes, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, offshore financial centre, Paul Samuelson, profit maximization, Reminiscences of a Stock Operator, risk free rate, risk tolerance, risk-adjusted returns, satellite internet, Savings and loan crisis, Sharpe ratio, Sheryl Sandberg, SoftBank, survivorship bias, Tesla Model S, too big to fail, tulip mania, union organizing

The company had filed for bankruptcy in 2003 and emerged as a new entity called ACE a year after, with a handful of legacy businesses, including Air Canada, the flagship airline; Jazz, a domestic regional airline; ACTS, an aircraft maintenance and service group; and Aeroplan, the loyalty program. The company’s valuation was allegedly lower than that of its separate components, a phenomenon that is not atypical for a public company with a complex structure. It has motivated a phenomenally successful type of hedge fund: activist investors. If the sum of the parts, in their estimation, is greater than the whole, activists will force management to split the company. In ACE’s case, management was proactively seeking to disassemble the pieces, starting by spinning off Aeroplan in 2005, then moving on to Jazz airlines. Have I mentioned that nothing is ever new on Wall Street?


pages: 552 words: 163,292

Boom: Mad Money, Mega Dealers, and the Rise of Contemporary Art by Michael Shnayerson

activist fund / activist shareholder / activist investor, banking crisis, Bonfire of the Vanities, capitalist realism, corporate raider, diversified portfolio, Donald Trump, East Village, estate planning, Etonian, gentrification, high net worth, index card, Jane Jacobs, junk bonds, mass immigration, Michael Milken, NetJets, Peter Thiel, plutocrats, rent control, rolodex, Silicon Valley, tulip mania, unbiased observer, upwardly mobile, vertical integration, Works Progress Administration

I didn’t have gray hair in 2010, when I arrived,” Deitch added. Within a year, he did. All Deitch could do was tell his side of the museum’s story to important collectors and hope they came on board. Later, he would tick off the names of donors he had cultivated: Maurice Marciano of Guess Jeans, collector Eugenio López, hedge funder Steve Cohen, activist investor Dan Loeb, collector Peter Brant, and international jeweler Laurence Graff, among others. On Deitch’s watch, MOCA’s endowment grew to $12 million in 2012 and to $95 million in 2013. In June 2012, the board backed Deitch in voting to fire Paul Schimmel. In the resulting uproar, pro-Schimmel board members resigned, including Pictures Generation artist Barbara Kruger, photographer Catherine Opie, painter Ed Ruscha, and Conceptual artist John Baldessari.

So they were at major museums, where curators needed the art that dealers and collectors could loan to produce crowd-pleasing shows. In both realms—auction houses and museums—a woman was playing a dominant role at the start of 2016, pushing contemporary art. At Sotheby’s, a bitter proxy battle had put the 270-year-old auction house at the mercy of activist investor Dan Loeb in 2014. Out went a number of old-timers. In, as president and CEO, came Tad Smith, directly from Madison Square Garden, a capable manager but with no art world experience. The art world had barely recovered from this broadside when Smith brought in a boutique advisory firm called Art Agency, Partners.


pages: 237 words: 67,154

Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet by Trebor Scholz, Nathan Schneider

1960s counterculture, activist fund / activist shareholder / activist investor, Airbnb, Amazon Mechanical Turk, Anthropocene, barriers to entry, basic income, benefit corporation, Big Tech, bitcoin, blockchain, Build a better mousetrap, Burning Man, business logic, capital controls, circular economy, citizen journalism, collaborative economy, collaborative editing, collective bargaining, commoditize, commons-based peer production, conceptual framework, content marketing, crowdsourcing, cryptocurrency, data science, Debian, decentralized internet, deskilling, disintermediation, distributed ledger, driverless car, emotional labour, end-to-end encryption, Ethereum, ethereum blockchain, food desert, future of work, gig economy, Google bus, hiring and firing, holacracy, income inequality, independent contractor, information asymmetry, Internet of things, Jacob Appelbaum, Jeff Bezos, job automation, Julian Assange, Kickstarter, lake wobegon effect, low skilled workers, Lyft, Mark Zuckerberg, means of production, minimum viable product, moral hazard, Network effects, new economy, offshore financial centre, openstreetmap, peer-to-peer, planned obsolescence, post-work, profit maximization, race to the bottom, radical decentralization, remunicipalization, ride hailing / ride sharing, Rochdale Principles, SETI@home, shareholder value, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, smart contracts, Snapchat, surveillance capitalism, TaskRabbit, technological solutionism, technoutopianism, transaction costs, Travis Kalanick, Tyler Cowen, Uber for X, uber lyft, union organizing, universal basic income, Vitalik Buterin, W. E. B. Du Bois, Whole Earth Catalog, WikiLeaks, women in the workforce, workplace surveillance , Yochai Benkler, Zipcar

Loomio is a robust social enterprise with an ethical business model that was started four years ago. As a worker-owned cooperative, Loomio is owned collectively by the people building it. The current board of directors is made up of four members and one former member. As an open source tool and global social enterprise, we actively engage developers, contractors, activists, investors, customers, advisors, and other stakeholders to work with us to make a better product and company. We’ve attracted talented people to work well below market rates without issuing traditional equity. We bootstrapped for four years through consulting revenue, loans, crowdfunding, grants, and donations.


pages: 239 words: 69,496

The Wisdom of Finance: Discovering Humanity in the World of Risk and Return by Mihir Desai

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, AOL-Time Warner, assortative mating, Benoit Mandelbrot, book value, Brownian motion, capital asset pricing model, Carl Icahn, carried interest, Charles Lindbergh, collective bargaining, corporate governance, corporate raider, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, follow your passion, George Akerlof, Gordon Gekko, greed is good, housing crisis, income inequality, information asymmetry, Isaac Newton, Jony Ive, Kenneth Rogoff, longitudinal study, Louis Bachelier, low interest rates, Monty Hall problem, moral hazard, Myron Scholes, new economy, out of africa, Paul Samuelson, Pierre-Simon Laplace, principal–agent problem, Ralph Waldo Emerson, random walk, risk/return, Robert Shiller, Ronald Coase, short squeeze, Silicon Valley, Steve Jobs, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, tontine, transaction costs, vertical integration, zero-sum game

Venture capitalists, who fund early stage companies, are particularly preoccupied with this problem and, as a result, stage their investments in bite-size portions with curious instruments like “convertible preferred stock.” The peculiarities of these financial practices are designed to facilitate the monitoring of entrepreneurs and to make sure they are pursuing an agenda that is coincident with their investors’ agenda. Alas, these “solutions,” too, have yielded their own problems. Activist investors and short sellers are paid in ways, including contracts that allow them to reap gains over short horizons, that can lead them to place short-term gains over long-term value. Private equity might seem better, but these investors are also paid with similar contracts that provide incentives to harvest investments at particular horizons.


pages: 519 words: 155,332

Tailspin: The People and Forces Behind America's Fifty-Year Fall--And Those Fighting to Reverse It by Steven Brill

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, airport security, American Society of Civil Engineers: Report Card, asset allocation, behavioural economics, Bernie Madoff, Bernie Sanders, Blythe Masters, Bretton Woods, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carl Icahn, carried interest, clean water, collapse of Lehman Brothers, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, Credit Default Swap, currency manipulation / currency intervention, deal flow, Donald Trump, electricity market, ending welfare as we know it, failed state, fake news, financial deregulation, financial engineering, financial innovation, future of work, ghettoisation, Glass-Steagall Act, Gordon Gekko, hiring and firing, Home mortgage interest deduction, immigration reform, income inequality, invention of radio, job automation, junk bonds, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, low interest rates, Mahatma Gandhi, Mark Zuckerberg, Michael Milken, military-industrial complex, mortgage tax deduction, Neil Armstrong, new economy, Nixon triggered the end of the Bretton Woods system, obamacare, old-boy network, opioid epidemic / opioid crisis, paper trading, Paris climate accords, performance metric, post-work, Potemkin village, Powell Memorandum, proprietary trading, quantitative hedge fund, Ralph Nader, ride hailing / ride sharing, Robert Bork, Robert Gordon, Robert Mercer, Ronald Reagan, Rutger Bregman, Salesforce, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, stock buybacks, Tax Reform Act of 1986, tech worker, telemarketer, too big to fail, trade liberalization, union organizing, Unsafe at Any Speed, War on Poverty, women in the workforce, working poor

In addition to that immediate trigger, buybacks have become a favorite tool for appeasing and enriching a new breed of raiders. In the last decade, raiders have taken on a new gloss, one that is even more consistent with the notion of shareholder democracy and that borrows the rhetoric of other democracy movements. Armed with cash from huge hedge funds that they control, the raiders now style themselves as “activist shareholders” engaged in campaigns to get even some of the largest and most successful companies to do better for their shareholders by “unlocking” the value they are hoarding. After they insert themselves by paying a few hundred million dollars for 2 or 3 percent of a company’s stock, they engage in high-profile, proxy-like campaigns.


The New Map: Energy, Climate, and the Clash of Nations by Daniel Yergin

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", 3D printing, 9 dash line, activist fund / activist shareholder / activist investor, addicted to oil, Admiral Zheng, Albert Einstein, American energy revolution, Asian financial crisis, autonomous vehicles, Ayatollah Khomeini, Bakken shale, Bernie Sanders, BRICs, British Empire, carbon tax, circular economy, clean tech, commodity super cycle, company town, coronavirus, COVID-19, decarbonisation, deep learning, Deng Xiaoping, Didi Chuxing, disruptive innovation, distributed generation, Donald Trump, driverless car, Edward Snowden, Elon Musk, energy security, energy transition, failed state, Ford Model T, geopolitical risk, gig economy, global pandemic, global supply chain, green new deal, Greta Thunberg, hydraulic fracturing, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), inventory management, James Watt: steam engine, John Zimmer (Lyft cofounder), Kickstarter, LNG terminal, Lyft, Malacca Straits, Malcom McLean invented shipping containers, Masayoshi Son, Masdar, mass incarceration, megacity, megaproject, middle-income trap, Mikhail Gorbachev, mutually assured destruction, new economy, off grid, oil rush, oil shale / tar sands, oil shock, open economy, paypal mafia, peak oil, pension reform, power law, price mechanism, purchasing power parity, RAND corporation, rent-seeking, ride hailing / ride sharing, rolling blackouts, Ronald Reagan, Russian election interference, self-driving car, Silicon Valley, smart cities, social distancing, South China Sea, sovereign wealth fund, Suez crisis 1956, super pumped, supply-chain management, TED Talk, trade route, Travis Kalanick, Twitter Arab Spring, Uber and Lyft, uber lyft, ubercab, UNCLOS, UNCLOS, uranium enrichment, vertical integration, women in the workforce

Power and renewable projects—“lower-carbon generation and distribution”—generally operate in highly-regulated markets and deliver lower rates of return than those traditionally of oil and gas projects. How will they square the circle with demands for returns from investors—which have to meet the retirement and pension needs of their fund-holders—and yet deliver an increasingly “green” portfolio for activist shareholders and millennial investors interested in “impact”? At the same time, the electricity business enables companies to participate more broadly in the changing energy value chain, provides more predictability in revenues, and offsets volatility in oil and gas markets, especially in light of what happened in 2020.


pages: 263 words: 75,455

Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioral Errors by Wesley R. Gray, Tobias E. Carlisle

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Andrei Shleifer, asset allocation, Atul Gawande, backtesting, beat the dealer, Black Swan, book value, business cycle, butter production in bangladesh, buy and hold, capital asset pricing model, Checklist Manifesto, cognitive bias, compound rate of return, corporate governance, correlation coefficient, credit crunch, Daniel Kahneman / Amos Tversky, discounted cash flows, Edward Thorp, Eugene Fama: efficient market hypothesis, financial engineering, forensic accounting, Henry Singleton, hindsight bias, intangible asset, Jim Simons, Louis Bachelier, p-value, passive investing, performance metric, quantitative hedge fund, random walk, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, shareholder value, Sharpe ratio, short selling, statistical model, stock buybacks, survivorship bias, systematic trading, Teledyne, The Myth of the Rational Market, time value of money, transaction costs

Most interesting, the market-beating returns do not dissipate in the one-year period following the initialSchedule 13D. Instead, target stocks earn an additional 11.4 percent to 17.8 percent above-market return during the year following the activists' interventions. The market-beating returns may be due to changes in stock operations implemented at the behest of the activist investors (see Table 9.1). TABLE 9.1 One-Year Abnormal Returns and Profitability Changes Following Activism In a 2008 paper, Jerry Martin and John Puthenpurackal16 examine the performance of a hypothetical portfolio that mimics Berkshire Hathaway's investments after they are disclosed to the market.


pages: 293 words: 78,439

Dual Transformation: How to Reposition Today's Business While Creating the Future by Scott D. Anthony, Mark W. Johnson

activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Web Services, Andy Rubin, Apollo 13, asset light, autonomous vehicles, barriers to entry, behavioural economics, Ben Horowitz, Big Tech, blockchain, business process, business process outsourcing, call centre, Carl Icahn, Clayton Christensen, cloud computing, commoditize, corporate governance, creative destruction, crowdsourcing, death of newspapers, disintermediation, disruptive innovation, distributed ledger, diversified portfolio, driverless car, Internet of things, invention of hypertext, inventory management, Jeff Bezos, job automation, job satisfaction, Joseph Schumpeter, Kickstarter, late fees, Lean Startup, long term incentive plan, Lyft, M-Pesa, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Minecraft, obamacare, Parag Khanna, Paul Graham, peer-to-peer lending, pez dispenser, recommendation engine, Salesforce, self-driving car, shareholder value, side project, Silicon Valley, SimCity, Skype, software as a service, software is eating the world, Steve Jobs, subscription business, the long tail, the market place, the scientific method, Thomas Kuhn: the structure of scientific revolutions, transfer pricing, uber lyft, Watson beat the top human players on Jeopardy!, Y Combinator, Zipcar

Total employment rose to almost 150,000, and its stock price increased fourfold between 2000 and 2015. But the forces of industry change are relentless. Revenues dipped from $21 billion in 2012 to $18 billion in 2015, and Xerox’s stock fell by almost 50 percent from January 2015 to January 2016. Later that year, influenced undoubtedly by pressure from activist investor Carl Icahn, Xerox announced plans to split into two companies: a business process-outsourcing company called Conduent, with 96,000 employees and $7 billion in revenue; and a copier and printer business, with 39,000 employees and $7 billion in revenue. The two offshoot businesses are individually more vibrant than either would have been a decade ago but no doubt will again confront the challenge of disruptive change in their respective markets.


pages: 263 words: 77,786

Tomorrow's Capitalist: My Search for the Soul of Business by Alan Murray

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Alvin Toffler, Berlin Wall, Bernie Sanders, Big Tech, Black Lives Matter, blockchain, Boris Johnson, call centre, carbon footprint, commoditize, coronavirus, corporate governance, corporate raider, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, decarbonisation, digital divide, disinformation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Ferguson, Missouri, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, future of work, gentrification, George Floyd, global pandemic, Greta Thunberg, gun show loophole, impact investing, income inequality, intangible asset, invisible hand, Jeff Bezos, job automation, knowledge worker, lockdown, London Whale, low interest rates, Marc Benioff, Mark Zuckerberg, market fundamentalism, means of production, minimum wage unemployment, natural language processing, new economy, old-boy network, price mechanism, profit maximization, remote working, risk-adjusted returns, Ronald Reagan, Salesforce, scientific management, shareholder value, side hustle, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, The Future of Employment, the payments system, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Washington Consensus, women in the workforce, work culture , working poor, zero-sum game

In 1981, the BRT issued a measurably different kind of statement about corporate purpose: “Corporations have a responsibility, first of all, to make available to the public quality goods and services at fair prices, thereby earning a profit that attracts investment to continue and enhance the enterprise, provide jobs and build the economy.” The BRT further stated that there was a “symbiotic relationship” between business and society. By the 1990s, when Reaganomics had taken hold, much of that thinking had moved to the back burner, at least in corporate boardrooms and C-suites. Faced with activist investors, the companies were paying extra attention to pleasing their shareholders. But even the BRT couldn’t ignore the changes that were happening in business. In June 2018, the business and economics columnist Steven Pearlstein wrote a Washington Post column decrying the short-term corporate mentality that he said was crushing many corners of the economy.


pages: 562 words: 201,502

Elon Musk by Walter Isaacson

4chan, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, AltaVista, Apollo 11, Apple II, Apple's 1984 Super Bowl advert, artificial general intelligence, autism spectrum disorder, autonomous vehicles, basic income, Big Tech, blockchain, Boston Dynamics, Burning Man, carbon footprint, ChatGPT, Chuck Templeton: OpenTable:, Clayton Christensen, clean tech, Colonization of Mars, computer vision, Computing Machinery and Intelligence, coronavirus, COVID-19, crowdsourcing, cryptocurrency, deep learning, DeepMind, Demis Hassabis, disinformation, Dogecoin, Donald Trump, Douglas Engelbart, drone strike, effective altruism, Elon Musk, estate planning, fail fast, fake news, game design, gigafactory, GPT-4, high-speed rail, hiring and firing, hive mind, Hyperloop, impulse control, industrial robot, information security, Jeff Bezos, Jeffrey Epstein, John Markoff, John von Neumann, Jony Ive, Kwajalein Atoll, lab leak, large language model, Larry Ellison, lockdown, low earth orbit, Marc Andreessen, Marc Benioff, Mars Society, Max Levchin, Michael Shellenberger, multiplanetary species, Neil Armstrong, Network effects, OpenAI, packet switching, Parler "social media", paypal mafia, peer-to-peer, Peter Thiel, QAnon, Ray Kurzweil, reality distortion field, remote working, rent control, risk tolerance, Rubik’s Cube, Salesforce, Sam Altman, Sam Bankman-Fried, San Francisco homelessness, Sand Hill Road, Saturday Night Live, self-driving car, seminal paper, short selling, Silicon Valley, Skype, SpaceX Starlink, Stephen Hawking, Steve Jobs, Steve Jurvetson, Steve Wozniak, Steven Levy, Streisand effect, supply-chain management, tech bro, TED Talk, Tesla Model S, the payments system, Tim Cook: Apple, universal basic income, Vernor Vinge, vertical integration, Virgin Galactic, wikimedia commons, William MacAskill, work culture , Y Combinator

If he had liked stability more than storm and drama, she would have been perfect for him. 36 Manufacturing Tesla, 2010–2013 With Griffin, Talulah, and Xavier celebrating ringing the NASDAQ opening bell, June 2010 With Marques Brownlee at the Tesla Fremont factory Fremont Beginning with the theology of globalization in the 1980s, and relentlessly driven by cost-cutting CEOs and their activist investors, American companies shut down domestic factories and offshored manufacturing. The trend accelerated in the early 2000s, when Tesla was getting started. Between 2000 and 2010, the U.S. lost one-third of its manufacturing jobs. By sending their factories abroad, American companies saved labor costs, but they lost the daily feel for ways to improve their products.

At their meeting, Agrawal told him that Dorsey had proposed a while back that Musk join the board. Agrawal urged him to do so. Musk was traveling in Germany two days later when the Twitter board sent over its official offer for him to join. But to Musk’s surprise, it was not a friendly agreement. It was based on what Twitter had used two years earlier when it agreed to put two hostile activist investors on the board. It was seven pages long and included provisions that would bar him from making public statements (and presumably tweets) critical of the company. From the Twitter board’s perspective, that was understandable. History showed, as would the future, the damage Musk could do when not compelled to holster his flamethrowers.


pages: 302 words: 84,428

Mastering the Market Cycle: Getting the Odds on Your Side by Howard Marks

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, behavioural economics, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, financial engineering, financial innovation, fixed income, Glass-Steagall Act, if you build it, they will come, income inequality, Isaac Newton, job automation, junk bonds, Long Term Capital Management, low interest rates, margin call, Michael Milken, money market fund, moral hazard, new economy, profit motive, quantitative easing, race to the bottom, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, secular stagnation, short selling, South Sea Bubble, stocks for the long run, superstar cities, The Chicago School, The Great Moderation, transaction costs, uptick rule, VA Linux, Y2K, yield curve

That’s the kind of crowd behavior that typifies . . . creates . . . and exacerbates cycles. In theory a bank CEO could have declined to join in this folly. But under the realities of the times, anyone who sat out the dance, lost market share and failed to rake in the “easy money” that his competitors were reaping could be forced out of his job by activist investors. Thus banks bid aggressively for the opportunity to provide capital as if the music would never stop. But cognizance of cycles makes it clear that eventually it will. This kind of risk tolerance and risk obliviousness plays an essential part in the up-phase that precedes—and sets the scene for—every dramatic down-phase.


pages: 286 words: 87,401

Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman, Chris Yeh

"Susan Fowler" uber, activist fund / activist shareholder / activist investor, adjacent possible, Airbnb, Amazon Web Services, Andy Rubin, autonomous vehicles, Benchmark Capital, bitcoin, Blitzscaling, blockchain, Bob Noyce, business intelligence, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, CRISPR, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, database schema, DeepMind, Didi Chuxing, discounted cash flows, Elon Musk, fake news, Firefox, Ford Model T, forensic accounting, fulfillment center, Future Shock, George Gilder, global pandemic, Google Hangouts, Google X / Alphabet X, Greyball, growth hacking, high-speed rail, hockey-stick growth, hydraulic fracturing, Hyperloop, initial coin offering, inventory management, Isaac Newton, Jeff Bezos, Joi Ito, Khan Academy, late fees, Lean Startup, Lyft, M-Pesa, Marc Andreessen, Marc Benioff, margin call, Mark Zuckerberg, Max Levchin, minimum viable product, move fast and break things, Network effects, Oculus Rift, oil shale / tar sands, PalmPilot, Paul Buchheit, Paul Graham, Peter Thiel, pre–internet, Quicken Loans, recommendation engine, ride hailing / ride sharing, Salesforce, Sam Altman, Sand Hill Road, Saturday Night Live, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, smart grid, social graph, SoftBank, software as a service, software is eating the world, speech recognition, stem cell, Steve Jobs, subscription business, synthetic biology, Tesla Model S, thinkpad, three-martini lunch, transaction costs, transport as a service, Travis Kalanick, Uber for X, uber lyft, web application, winner-take-all economy, work culture , Y Combinator, yellow journalism

Blitzscaling generally requires sacrificing short-term efficiency (and thus financial results) to achieve long-term value creation. Privately held companies are usually closely held; this can make it easier to get the major shareholders to agree on a risky, long-term investment—if you have shareholders who are willing to incur risk for a chance at a much greater reward. But a widely held public company may face activist investors and other such shareholder rebellions if it attempts to carry out a blitzscaling strategy. This could even lead to the worst of possibilities—incurring the initial expense of blitzscaling without the necessary commitment and follow-through to reap the long-term rewards. Many publicly traded blitzscalers like Google and Facebook have tried to avoid public market pressure by issuing two classes of stock so that decision-making authority is vested in a small number of people (i.e., Larry, Sergey, and Mark).


pages: 309 words: 81,975

Brave New Work: Are You Ready to Reinvent Your Organization? by Aaron Dignan

"Friedman doctrine" OR "shareholder theory", Abraham Maslow, activist fund / activist shareholder / activist investor, adjacent possible, Airbnb, Albert Einstein, autonomous vehicles, basic income, benefit corporation, Bertrand Russell: In Praise of Idleness, bitcoin, Black Lives Matter, Black Swan, blockchain, Buckminster Fuller, Burning Man, butterfly effect, cashless society, Clayton Christensen, clean water, cognitive bias, cognitive dissonance, content marketing, corporate governance, corporate social responsibility, correlation does not imply causation, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, David Heinemeier Hansson, deliberate practice, DevOps, disruptive innovation, don't be evil, Elon Musk, endowment effect, Ethereum, ethereum blockchain, financial engineering, Frederick Winslow Taylor, fulfillment center, future of work, gender pay gap, Geoffrey West, Santa Fe Institute, gig economy, Goodhart's law, Google X / Alphabet X, hiring and firing, hive mind, holacracy, impact investing, income inequality, information asymmetry, Internet of things, Jeff Bezos, job satisfaction, Kanban, Kevin Kelly, Kickstarter, Lean Startup, loose coupling, loss aversion, Lyft, Marc Andreessen, Mark Zuckerberg, minimum viable product, mirror neurons, new economy, Paul Graham, Quicken Loans, race to the bottom, reality distortion field, remote working, Richard Thaler, Rochdale Principles, Salesforce, scientific management, shareholder value, side hustle, Silicon Valley, single source of truth, six sigma, smart contracts, Social Responsibility of Business Is to Increase Its Profits, software is eating the world, source of truth, Stanford marshmallow experiment, Steve Jobs, subprime mortgage crisis, systems thinking, TaskRabbit, TED Talk, The future is already here, the High Line, too big to fail, Toyota Production System, Tragedy of the Commons, uber lyft, universal basic income, WeWork, Y Combinator, zero-sum game

When companies don’t go public, only elite investors get to enjoy the climb. Yet all that’s waiting for leadership on the other side of the IPO rainbow is the constant scrutiny and pressure of a bunch of spectators. The CEO who seeks to invest in long-term success (or, gasp, purpose and impact) is met with outcries from activist investors, while algorithmic high-frequency traders create and profit from short-term volatility. Eric Ries, the best-selling author of The Lean Startup and The Startup Way, has a better idea. A much better idea. Over the last five years he’s been quietly developing an alternative called the Long-Term Stock Exchange (LTSE).


pages: 269 words: 83,307

Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits by Kevin Roose

activist fund / activist shareholder / activist investor, Basel III, Bear Stearns, Carl Icahn, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, deal flow, discounted cash flows, Donald Trump, East Village, eat what you kill, eurozone crisis, financial engineering, fixed income, forward guidance, glass ceiling, Goldman Sachs: Vampire Squid, hedonic treadmill, information security, Jane Street, jitney, junk bonds, Kevin Roose, knowledge worker, Michael Milken, new economy, Occupy movement, off-the-grid, plutocrats, proprietary trading, Robert Shiller, selection bias, shareholder value, side project, Silicon Valley, Skype, Steve Jobs, tail risk, The Predators' Ball, too big to fail, two and twenty, urban planning, We are the 99%, work culture , young professional

A: “One has whiskers and stinks, and the other is a fish”) to unfunny and homophobic (Q: “What’s the biggest difference between Barney Frank and a Fenway Frank?” A: “Barney Frank comes in different size buns”). David Moore, Marc Lasry, and Keith Meister—respectively, a holding company CEO, a billionaire hedge fund manager, and an activist investor—sang a few seconds of a finance-themed parody of “YMCA” before getting the hook. Bill Mulrow, a top executive at the Blackstone Group, and Emil Henry, a hedge fund manager with Tiger Infrastructure Partners, performed a bizarre two-man comedy skit. Mulrow was dressed in raggedy, tie-dye clothes to play the part of a liberal radical, and Henry was playing the part of a wealthy baron.


pages: 328 words: 84,682

The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power by Michael A. Cusumano, Annabelle Gawer, David B. Yoffie

activist fund / activist shareholder / activist investor, Airbnb, AltaVista, Amazon Web Services, AOL-Time Warner, asset light, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, business logic, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, collective bargaining, commoditize, CRISPR, crowdsourcing, cryptocurrency, deep learning, Didi Chuxing, distributed ledger, Donald Trump, driverless car, en.wikipedia.org, fake news, Firefox, general purpose technology, gig economy, Google Chrome, GPS: selective availability, Greyball, independent contractor, Internet of things, Jeff Bezos, Jeff Hawkins, John Zimmer (Lyft cofounder), Kevin Roose, Lean Startup, Lyft, machine translation, Mark Zuckerberg, market fundamentalism, Metcalfe’s law, move fast and break things, multi-sided market, Network effects, pattern recognition, platform as a service, Ponzi scheme, recommendation engine, Richard Feynman, ride hailing / ride sharing, Robert Metcalfe, Salesforce, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, SoftBank, software as a service, sovereign wealth fund, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Steven Levy, subscription business, Susan Wojcicki, TaskRabbit, too big to fail, transaction costs, transport as a service, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Vision Fund, web application, zero-sum game

In late 2017, GE leaders remained optimistic about Predix, but acknowledged that, in the words of one executive, “doing that right and at scale is a massive challenge.”81 In 2018, GE also revealed dismal financial results: The company lost nearly $6 billion in 2017, the stock price was down over 50 percent for the year, and activist investors Trian Fund Management won a seat on the board. In response, Flannery was considering a wholesale reorientation of GE’s strategy, including $20 billion in asset sales and possible restructuring of the business. Among the changes Flannery proposed was a continuing shift in strategy for GE digital that de-emphasized Predix as an innovation platform for the industrial Internet in favor of selling solutions to GE’s existing customers.


pages: 892 words: 91,000

Valuation: Measuring and Managing the Value of Companies by Tim Koller, McKinsey, Company Inc., Marc Goedhart, David Wessels, Barbara Schwimmer, Franziska Manoury

accelerated depreciation, activist fund / activist shareholder / activist investor, air freight, ASML, barriers to entry, Basel III, Black Monday: stock market crash in 1987, book value, BRICs, business climate, business cycle, business process, capital asset pricing model, capital controls, Chuck Templeton: OpenTable:, cloud computing, commoditize, compound rate of return, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, currency risk, discounted cash flows, distributed generation, diversified portfolio, Dutch auction, energy security, equity premium, equity risk premium, financial engineering, fixed income, index fund, intangible asset, iterative process, Long Term Capital Management, low interest rates, market bubble, market friction, Myron Scholes, negative equity, new economy, p-value, performance metric, Ponzi scheme, price anchoring, proprietary trading, purchasing power parity, quantitative easing, risk free rate, risk/return, Robert Shiller, Savings and loan crisis, shareholder value, six sigma, sovereign wealth fund, speech recognition, stocks for the long run, survivorship bias, technology bubble, time value of money, too big to fail, transaction costs, transfer pricing, two and twenty, value at risk, yield curve, zero-coupon bond

All Spin-offs Carve-outs Asset sales Mean, % Median, % 3.0 1.8 4.5 3.6 2.3 0.9 2.6 1.6 Number of transactions 370 106 125 139 Source: J. Mulherin and A. Boone, “Comparing Acquisitions and Divestitures,” Journal of Corporate Finance 6 (2000): 117–139. in September 2013, Timken announced the spin-off of its steel business after an activist-investor campaign. Similarly, in 2014, PepsiCo faced pressure from an activist investor to separate its beverages and food businesses. This chapter first presents the evidence that divestitures create value and the factors that go into creating that value. Then it discusses why executives often shy away from proactively pursuing divestitures, in spite of this evidence.

Some executives argue that investors won’t let them focus on the long term; others fault the rise of shareholder activists in particular. Yet our research shows that even if short-term investors cause day-today fluctuations in a company’s share price and dominate quarterly earnings calls, longer-term investors are the ones who align market prices with intrinsic value.15 Moreover, the evidence shows that, on average, activist investors strengthen the long-term health of the companies they pursue—for example, often challenging existing compensation structures that encourage shorttermism.16 Instead, we often find that executives themselves or their boards are usually the source of short-termism. In a 2013 survey of more than 1,000 executives and board members, most cited their own executive teams and boards 12 R.


pages: 692 words: 167,950

The Ripple Effect: The Fate of Fresh Water in the Twenty-First Century by Alex Prud'Homme

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, activist fund / activist shareholder / activist investor, American Society of Civil Engineers: Report Card, big-box store, bilateral investment treaty, carbon credits, carbon footprint, clean water, commoditize, company town, corporate raider, Deep Water Horizon, en.wikipedia.org, Exxon Valdez, Garrett Hardin, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Joan Didion, John Snow's cholera map, Louis Pasteur, mass immigration, megacity, oil shale / tar sands, oil-for-food scandal, peak oil, remunicipalization, renewable energy credits, Report Card for America’s Infrastructure, rolling blackouts, Ronald Reagan, seminal paper, Silicon Valley, The Wealth of Nations by Adam Smith, Tragedy of the Commons, urban sprawl, William Langewiesche

In 2002, the EPA issued a Record of Decision, which defined 197 miles of the Hudson a Superfund site (the largest in the nation), and required GE to undertake a massive restoration effort. Although the Superfund law holds polluters retroactively responsible for any cleanup, GE maintained that the PCBs in the Hudson were better left undisturbed, and delayed the case for years. Between 1990 and 2005, activist shareholders discovered that GE had spent $122 million on political donations, lobbyists, scientific experts, and lawyers—such as Harvard Law School’s constitutional expert Laurence Tribe—to avoid dredging the Hudson. In 2001 Jack Welch retired and was replaced as GE chairman by Jeffrey Immelt, who agreed to work with the EPA to dredge the Hudson clear of PCBs.


pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disinformation, disruptive innovation, Donald Trump, driverless car, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, Glass-Steagall Act, global supply chain, Great Leap Forward, high net worth, household responsibility system, housing crisis, Ida Tarbell, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, Les Trente Glorieuses, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, Money creation, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, opioid epidemic / opioid crisis, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

This view became particularly influential when a study by Michael Jensen and Kevin Murphy in 1990 found that for every $1,000 change in shareholder wealth in the United States, the wealth of top management went up by only $3.25.41 The authors suggested it should be much more. Corporate chieftains obviously loved this message. Second, large activist shareholders ought to monitor firm management and push it to do the right thing for shareholders—a recent example was when the influential shareholders of the vehicle hire company Uber came together to depose the CEO, Travis Kalanick, whose aggressive management style and actions were apparently eroding Uber’s business prospects.


pages: 801 words: 209,348

Americana: A 400-Year History of American Capitalism by Bhu Srinivasan

activist fund / activist shareholder / activist investor, American ideology, AOL-Time Warner, Apple II, Apple's 1984 Super Bowl advert, bank run, barriers to entry, Bear Stearns, Benchmark Capital, Berlin Wall, blue-collar work, Bob Noyce, Bonfire of the Vanities, British Empire, business cycle, buy and hold, California gold rush, Carl Icahn, Charles Lindbergh, collective bargaining, commoditize, Cornelius Vanderbilt, corporate raider, cotton gin, cuban missile crisis, Deng Xiaoping, diversification, diversified portfolio, Douglas Engelbart, Fairchild Semiconductor, financial innovation, fixed income, Ford Model T, Ford paid five dollars a day, global supply chain, Gordon Gekko, guns versus butter model, Haight Ashbury, hypertext link, Ida Tarbell, income inequality, information security, invisible hand, James Watt: steam engine, Jane Jacobs, Jeff Bezos, John Markoff, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, laissez-faire capitalism, Louis Pasteur, Marc Andreessen, Menlo Park, Michael Milken, military-industrial complex, mortgage debt, mutually assured destruction, Norman Mailer, oil rush, peer-to-peer, pets.com, popular electronics, profit motive, punch-card reader, race to the bottom, refrigerator car, risk/return, Ronald Reagan, Sand Hill Road, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Steve Ballmer, Steve Jobs, Steve Wozniak, strikebreaker, Ted Nelson, The Death and Life of Great American Cities, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, traveling salesman, Upton Sinclair, Vannevar Bush, Works Progress Administration, zero-sum game

Using junk bonds, it would buy the tobacco and snack maker RJR Nabisco for nearly $25 billion. In most ways the KKR purchase marked the end of an era. But the end didn’t mean death. Over the years, the leveraged buyout would be rebranded as private equity—the private equity firm provided the down payment and borrowed the rest—and men like Icahn would be rebranded as activist investors, with specialized hedge funds in a later era becoming practiced in the art of publicly excoriating company CEOs. The labels changed, but the game remained the same. But in the heady atmosphere of the 1980s, Milken slipped in his activities as the junk bond king. He was accused of passing along inside information of pending deals, holding stock for favored clients to mask the identities of the true owners, and engaging in myriad technical securities violations—all to ensure the smooth functioning of his market.

Index The page numbers in this index refer to the printed version of this book. The link provided will take you to the beginning of that print page. You may need to scroll forward from that location to find the corresponding reference on your e-reader. Abdul-Jabbar, Kareem, 454 abolitionists, 118, 119, 122 activist investors, 445–49 Adams, Bud, 393 Adams, John, 39, 43, 45 Adams, Samuel, 39 Adams, Samuel Hopkins, 265–66 advertising of Budweiser, 180 of cereals, 261–62 of Coca-Cola, 264 by department stores, 203–4 by discounters, 404 early television and, 386 of early automobiles, 280 by Hearst in New York Times, 233 I Love Lucy and, 383 of Levittown, 374, 382 Nike and, 453–57 of patent medicines, 262–63 of slave auctions, 123 Super Bowl and, 394 of Vanderbilt’s steamboats, 68 African-Americans.


Americana by Bhu Srinivasan

activist fund / activist shareholder / activist investor, American ideology, AOL-Time Warner, Apple II, Apple's 1984 Super Bowl advert, bank run, barriers to entry, Bear Stearns, Benchmark Capital, Berlin Wall, blue-collar work, Bob Noyce, Bonfire of the Vanities, British Empire, business cycle, buy and hold, California gold rush, Carl Icahn, Charles Lindbergh, collective bargaining, commoditize, Cornelius Vanderbilt, corporate raider, cotton gin, cuban missile crisis, Deng Xiaoping, diversification, diversified portfolio, Douglas Engelbart, Fairchild Semiconductor, financial innovation, fixed income, Ford Model T, Ford paid five dollars a day, global supply chain, Gordon Gekko, guns versus butter model, Haight Ashbury, hypertext link, Ida Tarbell, income inequality, information security, invisible hand, James Watt: steam engine, Jane Jacobs, Jeff Bezos, John Markoff, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, laissez-faire capitalism, Louis Pasteur, Marc Andreessen, Menlo Park, Michael Milken, military-industrial complex, mortgage debt, mutually assured destruction, Norman Mailer, oil rush, peer-to-peer, pets.com, popular electronics, profit motive, punch-card reader, race to the bottom, refrigerator car, risk/return, Ronald Reagan, Sand Hill Road, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Steve Ballmer, Steve Jobs, Steve Wozniak, strikebreaker, Ted Nelson, The Death and Life of Great American Cities, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, traveling salesman, Upton Sinclair, Vannevar Bush, Works Progress Administration, zero-sum game

Using junk bonds, it would buy the tobacco and snack maker RJR Nabisco for nearly $25 billion. In most ways the KKR purchase marked the end of an era. But the end didn’t mean death. Over the years, the leveraged buyout would be rebranded as private equity—the private equity firm provided the down payment and borrowed the rest—and men like Icahn would be rebranded as activist investors, with specialized hedge funds in a later era becoming practiced in the art of publicly excoriating company CEOs. The labels changed, but the game remained the same. But in the heady atmosphere of the 1980s, Milken slipped in his activities as the junk bond king. He was accused of passing along inside information of pending deals, holding stock for favored clients to mask the identities of the true owners, and engaging in myriad technical securities violations—all to ensure the smooth functioning of his market.

Index The page numbers in this index refer to the printed version of this book. The link provided will take you to the beginning of that print page. You may need to scroll forward from that location to find the corresponding reference on your e-reader. Abdul-Jabbar, Kareem, 454 abolitionists, 118, 119, 122 activist investors, 445–49 Adams, Bud, 393 Adams, John, 39, 43, 45 Adams, Samuel, 39 Adams, Samuel Hopkins, 265–66 advertising of Budweiser, 180 of cereals, 261–62 of Coca-Cola, 264 by department stores, 203–4 by discounters, 404 early television and, 386 of early automobiles, 280 by Hearst in New York Times, 233 I Love Lucy and, 383 of Levittown, 374, 382 Nike and, 453–57 of patent medicines, 262–63 of slave auctions, 123 Super Bowl and, 394 of Vanderbilt’s steamboats, 68 African-Americans.


pages: 346 words: 89,180

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel, Stian Westlake

23andMe, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, bank run, banking crisis, Bernie Sanders, Big Tech, book value, Brexit referendum, business climate, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, cloud computing, cognitive bias, computer age, congestion pricing, corporate governance, corporate raider, correlation does not imply causation, creative destruction, dark matter, Diane Coyle, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, Elon Musk, endogenous growth, Erik Brynjolfsson, everywhere but in the productivity statistics, Fellow of the Royal Society, financial engineering, financial innovation, full employment, fundamental attribution error, future of work, gentrification, gigafactory, Gini coefficient, Hernando de Soto, hiring and firing, income inequality, index card, indoor plumbing, intangible asset, Internet of things, Jane Jacobs, Jaron Lanier, Jeremy Corbyn, job automation, Kanban, Kenneth Arrow, Kickstarter, knowledge economy, knowledge worker, laissez-faire capitalism, liquidity trap, low interest rates, low skilled workers, Marc Andreessen, Mother of all demos, Network effects, new economy, Ocado, open economy, patent troll, paypal mafia, Peter Thiel, pets.com, place-making, post-industrial society, private spaceflight, Productivity paradox, quantitative hedge fund, rent-seeking, revision control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Robert Solow, Ronald Coase, Sand Hill Road, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, software patent, sovereign wealth fund, spinning jenny, Steve Jobs, sunk-cost fallacy, survivorship bias, tacit knowledge, tech billionaire, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, total factor productivity, TSMC, Tyler Cowen, Tyler Cowen: Great Stagnation, urban planning, Vanguard fund, walkable city, X Prize, zero-sum game

For decades it invested in research and bringing to market a wide variety of innovative products, from Crimplene to tamoxifen to Perspex. It pioneered new ways of doing business that other firms profitably adopted, and ICI-trained chemists, engineers, and managers filled the ranks of British industry. But things began to change in the 1990s: frightened by a takeover threat from an activist investor, ICI began to focus on the pursuit of short-term shareholder value. To this end, it plunged enthusiastically into the M&A market, divesting or selling billions of dollars’ worth of divisions, and acquiring several others. The pursuit of focus and efficiency proved tough, and the company faced a growing debt burden and problems integrating its acquisitions.


pages: 284 words: 92,688

Disrupted: My Misadventure in the Start-Up Bubble by Dan Lyons

activist fund / activist shareholder / activist investor, Airbnb, Ben Horowitz, Bernie Madoff, Big Tech, bitcoin, Blue Bottle Coffee, call centre, Carl Icahn, clean tech, cloud computing, content marketing, corporate governance, disruptive innovation, dumpster diving, Dunning–Kruger effect, fear of failure, Filter Bubble, Golden Gate Park, Google Glasses, Googley, Gordon Gekko, growth hacking, hiring and firing, independent contractor, Jeff Bezos, Larry Ellison, Lean Startup, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Mary Meeker, Menlo Park, minimum viable product, new economy, Paul Graham, pre–internet, quantitative easing, ride hailing / ride sharing, Rosa Parks, Salesforce, Sand Hill Road, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, Snapchat, software as a service, South of Market, San Francisco, Stanford prison experiment, Steve Ballmer, Steve Jobs, Steve Wozniak, tech billionaire, tech bro, tech worker, TED Talk, telemarketer, tulip mania, uber lyft, Y Combinator, éminence grise

Eighteen months after buying Skype, Andreessen and his partners sold the company to Microsoft for $8.5 billion—three times what they paid. To some, Andreessen’s role as both an eBay director and an investor acquiring an asset from eBay seemed like a problem. “Andreessen, he’s screwed more people than Casanova, for Christ’s sake, and yet he goes and takes this attitude that he’s on the high moral ground,” activist investor Carl Icahn said on CNBC. Icahn complained that eBay had sold Skype for less than what it was worth and that eBay’s investors had been shortchanged. Andreessen said Icahn was “making up a fake conspiracy theory out of thin air.” The tech press sided with Andreessen. The story went nowhere. Andreessen is relentlessly optimistic and pounds away on the same message, which is that no matter how high the valuations of start-ups might go, this all makes sense.


Concentrated Investing by Allen C. Benello

activist fund / activist shareholder / activist investor, asset allocation, barriers to entry, beat the dealer, Benoit Mandelbrot, Bob Noyce, Boeing 747, book value, business cycle, buy and hold, carried interest, Claude Shannon: information theory, corporate governance, corporate raider, delta neutral, discounted cash flows, diversification, diversified portfolio, Dutch auction, Edward Thorp, family office, fixed income, Henry Singleton, high net worth, index fund, John Bogle, John von Neumann, junk bonds, Louis Bachelier, margin call, merger arbitrage, Paul Samuelson, performance metric, prudent man rule, random walk, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, shareholder value, Sharpe ratio, short selling, survivorship bias, technology bubble, Teledyne, transaction costs, zero-sum game

Michael is the author of numerous publications, including an article in the Harvard Business Review titled “Managing Productivity in the Service Sector” (Summer 1998), and coauthor of the book Value Investing from Graham to Buffett and Beyond (John Wiley & Sons, June 2001), and continues to lecture internationally on value investing. Tobias E. Carlisle is a founder and managing partner of Carbon Beach Asset Management LLC, and serves as chief investment officer. He is best known as the author of the websites greenbackd.com, and the acquirersmultiple. com, and the books Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), 221 222 About the Authors and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.


pages: 297 words: 93,882

Winning Now, Winning Later by David M. Cote

activist fund / activist shareholder / activist investor, Asian financial crisis, business cycle, business logic, business process, compensation consultant, data science, hiring and firing, Internet of things, Parkinson's law, Paul Samuelson, Silicon Valley, six sigma, Steve Jobs, stock buybacks, Toyota Production System, trickle-down economics, warehouse automation

If you find yourself shrinking back from this work, unhappy with how it might make you look as a leader, then you need to check yourself and your priorities. A great leader puts the organization first. A VALENTINE’S DAY SURPRISE On February 14, 2017, about six weeks before I was set to retire as CEO, an activist investor, the hedge fund Third Point Management, sent Darius a letter advising him to spin off our entire Aerospace business. At many companies, such a move would set off alarm bells, triggering fears of conflict to come and perhaps an impending takeover. We saw it differently: if this investor had a good idea for increasing value, we were eager to hear it.


pages: 279 words: 87,875

Underwater: How Our American Dream of Homeownership Became a Nightmare by Ryan Dezember

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist fund / activist shareholder / activist investor, Airbnb, Bear Stearns, business cycle, call centre, Carl Icahn, Cesare Marchetti: Marchetti’s constant, cloud computing, collateralized debt obligation, company town, coronavirus, corporate raider, COVID-19, Credit Default Swap, credit default swaps / collateralized debt obligations, data science, deep learning, Donald Trump, Home mortgage interest deduction, housing crisis, interest rate swap, low interest rates, margin call, McMansion, mortgage debt, mortgage tax deduction, negative equity, opioid epidemic / opioid crisis, pill mill, rent control, rolodex, Savings and loan crisis, sharing economy, sovereign wealth fund, transaction costs

They went looking for an investor to pair with, someone with deeper pockets than the doctors and dentists who had so far been funding their splurge. Treehouse had bought a few houses in Atlanta and California but needed many more properties in each market to make managing them cost-effective. Treehouse enlisted a young investment banker named Rich Ford to find a match on Wall Street. Ford approached Carl Icahn, the corporate raider and activist investor, and pitched the Carlyle Group, a $200 billion Washington, D.C., firm that had gained prominence privatizing government businesses and carving out unloved divisions from big corporations. Blackstone took a meeting. Jonathan Gray, the New York firm’s real estate chief, was mulling a move into single-family real estate, and his team was vetting rental operators for potential partnerships.


The Internet Trap: How the Digital Economy Builds Monopolies and Undermines Democracy by Matthew Hindman

A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, AltaVista, Amazon Web Services, barriers to entry, Benjamin Mako Hill, bounce rate, business logic, Cambridge Analytica, cloud computing, computer vision, creative destruction, crowdsourcing, David Ricardo: comparative advantage, death of newspapers, deep learning, DeepMind, digital divide, discovery of DNA, disinformation, Donald Trump, fake news, fault tolerance, Filter Bubble, Firefox, future of journalism, Ida Tarbell, incognito mode, informal economy, information retrieval, invention of the telescope, Jeff Bezos, John Perry Barlow, John von Neumann, Joseph Schumpeter, lake wobegon effect, large denomination, longitudinal study, loose coupling, machine translation, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, natural language processing, Netflix Prize, Network effects, New Economic Geography, New Journalism, pattern recognition, peer-to-peer, Pepsi Challenge, performance metric, power law, price discrimination, recommendation engine, Robert Metcalfe, search costs, selection bias, Silicon Valley, Skype, sparse data, speech recognition, Stewart Brand, surveillance capitalism, technoutopianism, Ted Nelson, The Chicago School, the long tail, The Soul of a New Machine, Thomas Malthus, web application, Whole Earth Catalog, Yochai Benkler

Patch expanded feverishly, and at its zenith it had nine hundred neighborhood sites and approximately 1,400 employees.2 The price tag for the effort was three hundred million dollars, comparable to aol’s high-profile purchase of the Huffington Post. Online Local News • 103 But throughout, Patch encountered skepticism from the business media and aol’s own shareholders. Traffic lagged badly, and ad revenue was dismal. In 2012, in an effort to fight off an activist investor group, Armstrong promised that Patch would be profitable by the end of 2013. But even with a brief traffic surge from Hurricane Sandy, profitability remained far out of reach. In August 2013, Armstrong announced that a third of Patch sites would be closed. Armstrong even tacitly admitted that some of Patch’s own editors did not use the site, telling all of his employees that “if you don’t use Patch as a product and you’re not invested in Patch, you owe it to everybody else at Patch to leave.”3 In January 2014, aol finally sold majority ownership of Patch to Hale Global company for undisclosed terms.


pages: 292 words: 87,720

Volt Rush: The Winners and Losers in the Race to Go Green by Henry Sanderson

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, animal electricity, autonomous vehicles, Boris Johnson, carbon footprint, Carl Icahn, circular economy, commodity super cycle, corporate governance, corporate social responsibility, COVID-19, David Attenborough, decarbonisation, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, Elon Musk, energy transition, Extinction Rebellion, Exxon Valdez, Fairphone, Ford Model T, gigafactory, global supply chain, Global Witness, income per capita, Internet of things, invention of the steam engine, Kickstarter, lockdown, megacity, Menlo Park, oil shale / tar sands, planned obsolescence, popular capitalism, purchasing power parity, QR code, reality distortion field, Ronald Reagan, Scramble for Africa, short squeeze, Silicon Valley, Silicon Valley startup, smart grid, sovereign wealth fund, Steve Jobs, supply-chain management, tech billionaire, Tesla Model S, The Chicago School, the new new thing, three-masted sailing ship, Tony Fadell, UNCLOS, WikiLeaks, work culture

He was enamoured by the giant Tenke Fungurume mine and decided to spend as much as possible to develop the deposit. A private runway was built and a highway to export copper and cobalt.7 But in 2015, commodity prices had plunged due to a weakening of demand in China and Adkerson was facing pressure from the billionaire New York-based activist investor Carl Icahn, who had become the largest shareholder of Freeport a year earlier. Icahn wanted the miner, which traced its roots to 1912, to reduce its debt levels, which had jumped to $20 billion after a series of ill-timed oil and gas acquisitions. Freeport’s shares were in free fall. During the LME week in late 2015 I watched as Adkerson took the stage, grabbed a microphone and sang ‘If you’re going through hell, Keep on going,’ a song by Rodney Adkins, at the Intercontinental Hotel in Park Lane.


I Love Capitalism!: An American Story by Ken Langone

activist fund / activist shareholder / activist investor, Bear Stearns, Berlin Wall, Bernie Madoff, Bernie Sanders, business climate, corporate governance, East Village, fixed income, glass ceiling, income inequality, Paul Samuelson, Ronald Reagan, short selling, Silicon Valley, single-payer health, six sigma, VA Linux, Y2K, zero-sum game

Around this time, early in the summer of 2006, two of Home Depot’s directors, Greg Brenneman and Labe Jackson, called me and said they felt Nardelli’s leadership was not helping the company. I held back on voicing an opinion. That fall of 2006—it was five and a half years into Bob’s tenure—an activist investment fund out in San Diego called Relational Investors began to take an interest in Home Depot. Activist funds critique companies they’re invested in and suggest improvements. In theory, this is all to the good for a company and its stockholders. But it can get coercive, and counterproductive. If the company doesn’t follow the fund’s suggestions, the fund may mount a proxy fight to gain control, or at the very least get active in a very public way, much as Nelson Peltz had done with GE and Paul Singer with Arconic (formerly Alcoa) before he actually did launch a proxy fight.

On Friday night at ten, all twelve members of the Home Depot board, including Bob and Marty Lipton, got on a conference call to discuss how we would respond to Relational Investors. We all agreed that Nardelli should cancel the meetings he’d set up. We confirmed that Wachtell, Lipton would represent us legally, but we decided that we didn’t want a PR firm or an investment-banking firm yet. We were a wounded company: publicity in a battle with an activist fund would be a delicate matter. And as for which banker we should choose, as Marty Lipton later told me, “Look, you should pick somebody you really trust, because many bankers, when they find out this is going on, will run ahead of you and try to encourage another firm to come after you.” To try to take us over, in other words.

See also medical business; New York University Medical Center hedge funds, 169 Heidrick & Struggles, 207, 211 Henderson, Martha, 27–28 Herlihy, Ed, 193–95, 201–2, 244, 265 Hermann, Ray, 46 Hevesi, Alan, 188 Hight, Jack, 91–92, 167–68 Hill, Bonnie, 211, 218, 223, 227 Holzman, Steve, 245–48 Home Depot, 250, 255, 258 and activist fund, 222–25 under Blake, 226–35 board of, 207–13, 216, 218–19, 222–30 culture of, 181, 214–15, 221–22, 228–29, 233 employees of, 235, 259–63, 265 founding of, 116, 158–61, 230–31, 250–51, 262 IPO of, 160–61, 240 leadership of, 206–13 morale problems at, 211, 216–17, 221–23, 228, 233 under Nardelli, 190, 210–35 stock of, 169, 184, 216–17, 219–20, 223, 233, 235, 254 success of, 174, 176, 204, 213–16, 241 home-improvement business, 123, 129–42, 145–61, 163–64.


pages: 831 words: 98,409

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

Andrew Clark, “Lehman Brothers’ Golden Girl, Erin Callan: Through the Glass Ceiling—and Off the Glass Cliff,” Guardian, March 19, 2010, http://www.theguardian.com/business/2010/mar/19/lehmans-erin-callan-glass-cliff. 28. Gillian Tett, “Lunch with the FT: Christine Lagarde,” Financial Times, September 12, 2014, http://www.ft.com/intl/cms/s/0/4c506aec-3938-11e4-9526-00144feabdc0.xhtml. 29. Andrew Ross Sorkin, “Do Activist Investors Target Female C.E.O.s?” New York Times, February 9, 2015, http://dealbook.nytimes.com/2015/02/09/the-women-of-the-s-p-500-and-investor-activism. 30. Debora L. Spar, Wonder Women: Sex, Power, and the Quest for Perfection (New York: Farrar, Straus and Giroux, 2013), Kindle locations 3222-25, Kindle edition. 31.


pages: 340 words: 100,151

Secrets of Sand Hill Road: Venture Capital and How to Get It by Scott Kupor

activist fund / activist shareholder / activist investor, Airbnb, Amazon Web Services, asset allocation, barriers to entry, Ben Horowitz, Benchmark Capital, Big Tech, Blue Bottle Coffee, carried interest, cloud computing, compensation consultant, corporate governance, cryptocurrency, discounted cash flows, diversification, diversified portfolio, estate planning, family office, fixed income, Glass-Steagall Act, high net worth, index fund, information asymmetry, initial coin offering, Lean Startup, low cost airline, Lyft, Marc Andreessen, Myron Scholes, Network effects, Paul Graham, pets.com, power law, price stability, prudent man rule, ride hailing / ride sharing, rolodex, Salesforce, Sand Hill Road, seminal paper, shareholder value, Silicon Valley, software as a service, sovereign wealth fund, Startup school, the long tail, Travis Kalanick, uber lyft, VA Linux, Y Combinator, zero-sum game

While it seems to be a bit of a chicken-and-egg question, the data point toward the former, as the average age of companies from founding to IPO started increasing (from six and a half to ten and a half years) and the annual number of IPOs started decreasing years before robust late-stage private financing became available. 5. There’s Too Much Pressure on Public Companies These Days The lack of IPOs has also been partly blamed on the rise of activist investors. These are investors who purchase stock in a public company and try to agitate for change designed to increase the value of the stock. Such changes often include introducing new board members, who in turn can make changes to the leadership of the company. So why navigate these public company pressures if there’s enough capital available in the private markets to stay private longer?


pages: 372 words: 101,678

Lessons from the Titans: What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success by Scott Davis, Carter Copeland, Rob Wertheimer

3D printing, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, airport security, asset light, barriers to entry, Big Tech, Boeing 747, business cycle, business process, clean water, commoditize, coronavirus, corporate governance, COVID-19, data science, disruptive innovation, Elisha Otis, Elon Musk, factory automation, fail fast, financial engineering, Ford Model T, global pandemic, hydraulic fracturing, Internet of things, iterative process, junk bonds, Kaizen: continuous improvement, Kanban, low cost airline, Marc Andreessen, Mary Meeker, megacity, Michael Milken, Network effects, new economy, Ponzi scheme, profit maximization, random walk, RFID, ride hailing / ride sharing, risk tolerance, Salesforce, shareholder value, Silicon Valley, six sigma, skunkworks, software is eating the world, strikebreaker, tech billionaire, TED Talk, Toyota Production System, Uber for X, value engineering, warehouse automation, WeWork, winner-take-all economy

Future CEOs struggled to re-create the margin magic that defined David’s tenure, and a once powerful incentive compensation scheme with margin improvement at its center proved too rigid. It drove suboptimal decisions around investment that weakened the company’s competitive positioning. As a result, 10 percent growth targets became 6 percent, and 6 percent targets later became 4.5 percent. Years of underperformance culminated in the entrance of activist investors and the breakup of the once mighty conglomerate. Incentives drive outcomes in an organization. At UTC, corporate incentives and a focus on improving margins led to many years of success, followed by several years of failure. The rise and fall of United Technologies highlights that the best incentive systems are not static or myopically focused; they should exhibit the same dynamism as an organization’s ever-evolving set of opportunities and risks.


pages: 411 words: 98,128

Bezonomics: How Amazon Is Changing Our Lives and What the World's Best Companies Are Learning From It by Brian Dumaine

activist fund / activist shareholder / activist investor, AI winter, Airbnb, Amazon Robotics, Amazon Web Services, Atul Gawande, autonomous vehicles, basic income, Bernie Sanders, Big Tech, Black Swan, call centre, Cambridge Analytica, carbon tax, Carl Icahn, Chris Urmson, cloud computing, corporate raider, creative destruction, Danny Hillis, data science, deep learning, Donald Trump, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fake news, fulfillment center, future of work, gig economy, Glass-Steagall Act, Google Glasses, Google X / Alphabet X, income inequality, independent contractor, industrial robot, Internet of things, Jeff Bezos, job automation, Joseph Schumpeter, Kevin Kelly, Kevin Roose, Lyft, Marc Andreessen, Mark Zuckerberg, military-industrial complex, money market fund, natural language processing, no-fly zone, Ocado, pets.com, plutocrats, race to the bottom, ride hailing / ride sharing, Salesforce, Sand Hill Road, self-driving car, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Snapchat, speech recognition, Steve Jobs, Stewart Brand, supply-chain management, TED Talk, Tim Cook: Apple, too big to fail, Travis Kalanick, two-pizza team, Uber and Lyft, uber lyft, universal basic income, warehouse automation, warehouse robotics, wealth creators, web application, Whole Earth Catalog, work culture

Boone Pickens, who put pressure on boards and management to run their corporations solely for shareholders. Since then, running a business to maximize returns for shareholders has become the modus operandi. Commonly, CEOs today will do whatever it takes—cutting R&D, firing employees, slicing benefits—to make the latest quarterly earnings, because if they don’t deliver, activist investors will find someone who will. Unfortunately, the focus on shareholder value will only get worse as the next generation of powerful corporations, fueled by big data and AI, becomes even more dominant. Yes, shareholders’ interests certainly need to be taken into account, but so must those of the employees and the communities in which corporations operate.


pages: 406 words: 105,602

The Startup Way: Making Entrepreneurship a Fundamental Discipline of Every Enterprise by Eric Ries

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, AOL-Time Warner, autonomous vehicles, barriers to entry, basic income, Ben Horowitz, billion-dollar mistake, Black-Scholes formula, Blitzscaling, call centre, centralized clearinghouse, Clayton Christensen, cognitive dissonance, connected car, corporate governance, DevOps, Elon Musk, en.wikipedia.org, fault tolerance, financial engineering, Frederick Winslow Taylor, global supply chain, Great Leap Forward, hockey-stick growth, index card, Jeff Bezos, Kickstarter, Lean Startup, loss aversion, machine readable, Marc Andreessen, Mark Zuckerberg, means of production, minimum viable product, moral hazard, move fast and break things, obamacare, PalmPilot, peer-to-peer, place-making, rent-seeking, Richard Florida, Sam Altman, Sand Hill Road, scientific management, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, Steve Jobs, TechCrunch disrupt, the scientific method, time value of money, Toyota Production System, two-pizza team, Uber for X, universal basic income, web of trust, Y Combinator

Of course, this is the ultimate short-term solution since once you’ve done it, the forest will have almost no remaining value. Yet this is what too many of our public companies are doing: cannibalizing their long-term value by destroying their own brand, squeezing vendors, shortchanging customers, failing to invest in employees, and using the company’s resources to enrich insiders and activist investors via financial engineering. All of these activities share the same problem: They work only in the short term. In companies that have grown a sufficiently large and productive “forest” over years or decades, there’s an awful lot of firewood to be cut down before the damage becomes evident. This is the inevitable result of treating companies as if their obligation to maximize shareholder value means maximizing quarterly returns.


pages: 363 words: 109,834

The Crux by Richard Rumelt

activist fund / activist shareholder / activist investor, air gap, Airbnb, AltaVista, AOL-Time Warner, Bayesian statistics, behavioural economics, biodiversity loss, Blue Ocean Strategy, Boeing 737 MAX, Boeing 747, Charles Lindbergh, Clayton Christensen, cloud computing, cognitive bias, commoditize, coronavirus, corporate raider, COVID-19, creative destruction, crossover SUV, Crossrail, deep learning, Deng Xiaoping, diversified portfolio, double entry bookkeeping, drop ship, Elon Musk, en.wikipedia.org, financial engineering, Ford Model T, Herman Kahn, income inequality, index card, Internet of things, Jeff Bezos, Just-in-time delivery, Larry Ellison, linear programming, lockdown, low cost airline, low earth orbit, Lyft, Marc Benioff, Mark Zuckerberg, Masayoshi Son, meta-analysis, Myron Scholes, natural language processing, Neil Armstrong, Network effects, packet switching, PageRank, performance metric, precision agriculture, RAND corporation, ride hailing / ride sharing, Salesforce, San Francisco homelessness, search costs, selection bias, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social distancing, SoftBank, software as a service, statistical model, Steve Ballmer, Steve Jobs, stochastic process, Teledyne, telemarketer, TSMC, uber lyft, undersea cable, union organizing, vertical integration, WeWork

For example, in 1980 the rise in oil prices had damaged Monsanto’s large asset-heavy petrochemicals business. Still, it had the skill and resources to redeploy into agricultural genetics and build a profitable, growing new business that helped alleviate world hunger. This was, of course, a long-term strategy not offering the kind of stock-price pop that interests the “activist investors” of the world. In case (A), where a new technology could hurt a current profit pool too much to warrant an immediate response, the cost and benefits of waiting should be assessed. It just might be that letting the existing business slowly decay is best. To do this gracefully, it is wise to make it part of a more diversified firm’s portfolio.


pages: 561 words: 114,843

Startup CEO: A Field Guide to Scaling Up Your Business, + Website by Matt Blumberg

activist fund / activist shareholder / activist investor, airport security, Albert Einstein, AOL-Time Warner, bank run, Ben Horowitz, Blue Ocean Strategy, book value, Broken windows theory, crowdsourcing, deskilling, fear of failure, financial engineering, high batting average, high net worth, hiring and firing, Inbox Zero, James Hargreaves, Jeff Bezos, job satisfaction, Kickstarter, knowledge economy, knowledge worker, Lean Startup, Mark Zuckerberg, minimum viable product, pattern recognition, performance metric, pets.com, rolodex, Rubik’s Cube, Salesforce, shareholder value, Silicon Valley, Skype

In theory, this approach could be used in both private and public companies but in reality it is almost entirely limited to public companies. This will be perceived as a hostile move by most companies and they will fight the alternative slate of directors. This “alternative slate” approach is most commonly taken by “activist investors” who take a meaningful minority stake in a public company and agitate for changes in the board, management and strategic direction of the company. It can also be used in a hostile takeover effort. It is rare for an alternative slate to take control of a company but it is fairly common for a new director or two to get elected in this way.


A People’s History of Computing in the United States by Joy Lisi Rankin

activist fund / activist shareholder / activist investor, Albert Einstein, Apple II, Bill Gates: Altair 8800, Charles Babbage, Compatible Time-Sharing System, computer age, Computer Lib, corporate social responsibility, digital divide, Douglas Engelbart, Douglas Engelbart, Grace Hopper, Hacker Ethic, Howard Rheingold, Howard Zinn, it's over 9,000, Jeff Bezos, John Markoff, John von Neumann, language acquisition, Mark Zuckerberg, Menlo Park, military-industrial complex, Mother of all demos, Multics, Network effects, Norbert Wiener, pink-collar, profit motive, public intellectual, punch-card reader, RAND corporation, Silicon Valley, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Ted Nelson, the market place, urban planning, Whole Earth Catalog, wikimedia commons

In 1980, church groups castigated CDC for its sales of PLATO to South Africa ­u nder apartheid. In 1982, the Minneapolis Tribune challenged the veracity of CDC’s advertising claims. In fact, in her article on PLATO, Elisabeth Van Meer argues that Norris attempted to market PLATO as a solution to social prob­lems, but that veneer of corporate social responsibility was criticized by activists, investors, and journalists through controversies about truth in advertising and supporting South African apartheid. Van Meer, “PLATO.” 15. ­People’s Computer Com­pany 1, no. 1 (October 1972), 1; all ellipses in original. 16. Circulation number from Fred Turner, From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism (Chicago: University of Chicago Press, 2006), 113. 17.


pages: 407 words: 113,198

The Secret Life of Groceries: The Dark Miracle of the American Supermarket by Benjamin Lorr

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, barriers to entry, Boeing 747, Brownian motion, carbon footprint, collective bargaining, food miles, Ford Model T, global supply chain, hiring and firing, hive mind, independent contractor, Internet Archive, invention of the wheel, inventory management, Isaac Newton, Kanban, low skilled workers, Mason jar, obamacare, off grid, race to the bottom, Ralph Nader, risk tolerance, Ronald Reagan, Silicon Valley, supply-chain management, Toyota Production System, transatlantic slave trade, Upton Sinclair, vertical integration, Wayback Machine, Whole Earth Catalog, women in the workforce

AFTERWORD The Long Road from P’Aon to Amazon–Whole Foods That corpse you planted last year in your garden Has it begun to sprout? Will it bloom this year? . . . You! Hypocrite reader! My fellow! My brother! —Baudelaire, translated within Eliot’s The Waste Land Almost exactly one year after my last visit with the LPN in Thailand, I learn that activist investor JANA Partners has acquired 8 percent of Whole Foods stock. It will be the first step in a series of events that lead the Internet giant Amazon to swallow the grocer whole. It is a deal that is portrayed with an almost eschatological force in the trades, and perhaps appropriately so. With it, retail grocery feels like it is closing in on some type of end point, almost a bathroom-drain-style singularity through which all supply chain consultants must pass before being evaporated to the cloud.


pages: 464 words: 121,983

Disaster Capitalism: Making a Killing Out of Catastrophe by Antony Loewenstein

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Asian financial crisis, benefit corporation, British Empire, business logic, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, clean water, collective bargaining, colonial rule, corporate social responsibility, Corrections Corporation of America, do well by doing good, Edward Snowden, facts on the ground, failed state, falling living standards, Ferguson, Missouri, financial independence, full employment, G4S, Goldman Sachs: Vampire Squid, housing crisis, illegal immigration, immigration reform, income inequality, Julian Assange, Kickstarter, Leo Hollis, mandatory minimum, market fundamentalism, mass incarceration, Naomi Klein, neoliberal agenda, obamacare, Occupy movement, offshore financial centre, open borders, private military company, profit motive, Ralph Nader, Ronald Reagan, Russell Brand, Satyajit Das, Scramble for Africa, Slavoj Žižek, stem cell, the medium is the message, trade liberalization, vertical integration, WikiLeaks, work culture

But the management contract for Dilley was problematic, with Obama officials rushing to seal the deal and establishing the facility under conditions set for a CCA prison in Eloy, one thousand miles from Dilley. Eloy officials stated that they had no intention of visiting or monitoring Dilley.46 During Obama’s two terms in office, his administration continued to outsource more facilities to CCA and other corporations that ignored federal laws and abused human rights. Alex Friedmann, an activist investor and former prisoner who held CCA shares, told CNN: “Investors see this as an opportunity [the government imprisoning migrants]. This is a potentially untapped market that will have strong demand.”47 Disaster capitalism was the winner. Silky Shah, co-director of the Detention Watch Network, slammed the Obama administration’s decision to expand privatized facilities, arguing that “family detention is an abusive and inhumane practice that erodes family bonds and undermines children’s wellbeing.”48 Out in Lumpkin, the roads were empty.


pages: 413 words: 117,782

What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences by Steven G. Mandis

activist fund / activist shareholder / activist investor, algorithmic trading, Bear Stearns, Berlin Wall, Bob Litterman, bonus culture, book value, BRICs, business process, buy and hold, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, commoditize, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, diversification, eat what you kill, Emanuel Derman, financial innovation, fixed income, friendly fire, Glass-Steagall Act, Goldman Sachs: Vampire Squid, high net worth, housing crisis, junk bonds, London Whale, Long Term Capital Management, merger arbitrage, Myron Scholes, new economy, passive investing, performance metric, proprietary trading, radical decentralization, risk tolerance, Ronald Reagan, Saturday Night Live, Satyajit Das, shareholder value, short selling, sovereign wealth fund, subprime mortgage crisis, systems thinking, The Nature of the Firm, too big to fail, value at risk

For example, I worked on a team that advised AT&T on combining its broadband business with Comcast in a transaction that valued AT&T broadband at $72 billion. I also helped sell a private company to Warren Buffett’s Berkshire Hathaway. As the head of Goldman’s unsolicited take-over and hostile raid defense practice, I worked on a team advising a client involved in a proxy fight with activist investor Carl Icahn. When I joined Goldman, partnership election at the firm was considered one of the most prestigious achievements on Wall Street, in part because the process was highly selective and a Goldman partnership was among the most lucrative. The M&A department had a remarkably good track record of its bankers being elected—probably one of the highest percentages of success in the firm at the time.


pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, Bullingdon Club, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial engineering, financial innovation, Flash crash, Ford Model T, Frank Gehry, Gini coefficient, Glass-Steagall Act, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Max Levchin, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, seminal paper, Sheryl Sandberg, short selling, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Simon Kuznets, sovereign wealth fund, starchitect, stem cell, Steve Jobs, TED Talk, the long tail, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

Many of today’s plutocrats stumbled a decade or two into their careers, but by then they had already accomplished so much that they were poised to seize even larger opportunities. The premium on early success means that the alpha geeks of the super-elite have been driven from a young age. The dorm room incubation of our most important technology companies is common knowledge. That’s where hedge funds are starting, too. Bill Ackman, the most influential activist investor in America today, whose targets have included J.C. Penney and Target, founded his first hedge fund with a classmate right after graduating with an MBA from Harvard. Ken Griffin, the billionaire founder of Citadel, the Chicago-based hedge fund, started trading bonds out of his college dorm room.


pages: 767 words: 208,933

Liberalism at Large: The World According to the Economist by Alex Zevin

"there is no alternative" (TINA), activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, anti-communist, Asian financial crisis, bank run, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, business cycle, capital controls, carbon tax, centre right, Chelsea Manning, collective bargaining, Columbine, Corn Laws, corporate governance, corporate social responsibility, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, desegregation, disinformation, disruptive innovation, do well by doing good, Donald Trump, driverless car, Edward Snowden, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, global supply chain, guns versus butter model, hiring and firing, imperial preference, income inequality, interest rate derivative, invisible hand, It's morning again in America, Jeremy Corbyn, John von Neumann, Joseph Schumpeter, Julian Assange, junk bonds, Khartoum Gordon, land reform, liberal capitalism, liberal world order, light touch regulation, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, means of production, Michael Milken, Mikhail Gorbachev, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, new economy, New Journalism, Nixon triggered the end of the Bretton Woods system, no-fly zone, Norman Macrae, Northern Rock, Occupy movement, Philip Mirowski, plutocrats, post-war consensus, price stability, quantitative easing, race to the bottom, railway mania, rent control, rent-seeking, road to serfdom, Ronald Reagan, Rosa Parks, Seymour Hersh, Snapchat, Socratic dialogue, Steve Bannon, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade liberalization, trade route, unbanked and underbanked, underbanked, unorthodox policies, upwardly mobile, War on Poverty, WikiLeaks, Winter of Discontent, Yom Kippur War, young professional

A ‘broadening class of people who have benefited from globalization’, cosmocrats might just be ‘the most meritocratic ruling class the world has ever seen’.79 The cosmocrats were everywhere, if you knew how to look. There were relative unknowns like Patrick Wang in Hong Kong, scion of an industrial family, ‘his suit exquisitely tailored, his thick black hair neatly combed, and he speaks impeccable Harvard Business School English’. Or Jang Ha-sung, economist and activist shareholder in Seoul, ‘preppie-looking in a blue blazer, club tie and button-down shirt, a former student of finance at the Wharton school’, feet up at home, as ‘opera burbles in the background’. Western countries also had some: in Bolton, England, Marcus de Ferranti, Eton graduate, electronics heir, fighter pilot, who emerged from aristocratic torpor to found a virtual telephone exchange; in Johannesburg, Lyn Van Haght, ‘tall, blond Californian’, who ran a heavily-fortified testing centre for private education company Sylvain, ‘creating the black middle class that the continent needs so desperately’.80 Some looked strange: Steven Hirsch, an LA pornography studio chief, ‘tanned and aerobicized’ but oddly ‘sounds as if he has graduated from a high-powered business school’ or Jackson Thubela in Soweto, a ‘gold toothed twenty year old who often wears an Adidas tracksuit’ and ran a phone stand.


pages: 91 words: 26,009

Capitalism: A Ghost Story by Arundhati Roy

activist fund / activist shareholder / activist investor, Bretton Woods, corporate governance, feminist movement, Frank Gehry, ghettoisation, Howard Zinn, informal economy, land bank, land reform, Mahatma Gandhi, means of production, megacity, microcredit, Nelson Mandela, neoliberal agenda, Occupy movement, RAND corporation, reserve currency, special economic zone, spectrum auction, stem cell, The Chicago School, Washington Consensus, WikiLeaks

Mischievously, when India’s government or sections of its corporate press want to run a smear campaign against a genuine people’s movement, like the Narmada Bachao Andolan, or the protest against the Koodankulam nuclear reactor, they accuse these movements of being NGOs receiving “foreign funding.” They know very well that the mandate of most NGOs, in particular the well-funded ones, is to further the project of corporate globalization, not thwart it. Armed with their billions, these NGOs have waded into the world, turning potential revolutionaries into salaried activists, funding artists, intellectuals, and filmmakers, gently luring them away from radical confrontation, ushering them in the direction of multiculturalism, gender equity, community development—the discourse couched in the language of identity politics and human rights. The transformation of the idea of justice into the industry of human rights has been a conceptual coup in which NGOs and foundations have played a crucial part.


All About Asset Allocation, Second Edition by Richard Ferri

activist fund / activist shareholder / activist investor, Alan Greenspan, asset allocation, asset-backed security, barriers to entry, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, book value, buy and hold, capital controls, commoditize, commodity trading advisor, correlation coefficient, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, equity premium, equity risk premium, estate planning, financial independence, fixed income, full employment, high net worth, Home mortgage interest deduction, implied volatility, index fund, intangible asset, inverted yield curve, John Bogle, junk bonds, Long Term Capital Management, low interest rates, managed futures, Mason jar, money market fund, mortgage tax deduction, passive income, pattern recognition, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, selection bias, Sharpe ratio, stock buybacks, stocks for the long run, survivorship bias, too big to fail, transaction costs, Vanguard fund, yield curve

Event-driven strategies take advantage of corporate transaction announcements and other one-time events. An example would be “distressed securities,” which involve investing in companies that are in or near bankruptcy. Another type of event-driven strategy is an activist fund, which is predatory in nature. The managers of an activist fund take sizable positions in small, flawed companies and then use their influence to force management changes and restructuring. A third type of event-driven fund is venture capital. Venture funds invest in start-up companies. Directional or tactical strategies. The largest group of hedge funds uses directional or tactical strategies.


pages: 457 words: 143,967

The Bank That Lived a Little: Barclays in the Age of the Very Free Market by Philip Augar

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Bonfire of the Vanities, bonus culture, book value, break the buck, business logic, call centre, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, family office, financial deregulation, financial innovation, fixed income, foreign exchange controls, Glass-Steagall Act, high net worth, hiring and firing, index card, index fund, interest rate derivative, light touch regulation, loadsamoney, Long Term Capital Management, long term incentive plan, low interest rates, Martin Wolf, money market fund, moral hazard, Nick Leeson, Northern Rock, offshore financial centre, old-boy network, out of africa, prediction markets, proprietary trading, quantitative easing, risk free rate, Ronald Reagan, shareholder value, short selling, Sloane Ranger, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, too big to fail, vertical integration, wikimedia commons, yield curve

Her 2008 adversary Roger Jenkins was one of the four men charged by the SFO. William, the Thinker, remained a fund manager, and early in 2018 noted with interest reports of another hedge fund’s $1 billion investment in Barclays and the subsequent acquisition of a 5 per cent stake in the bank by Edward Bramson, an activist investor.2 Karl Edwards founded a new business, October House Wines. He no longer banks with Barclays. Illustrations 1. Where it all began: the Bar Don Quijote, San Antonio, Ibiza. 2. Tom Camoys, a modern English aristocrat – though one with neither the inclination nor the means to live a life of idleness – in the Barclays boardroom. 3. 4. 5.


pages: 421 words: 128,094

King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone by David Carey

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, asset allocation, banking crisis, Bear Stearns, Bonfire of the Vanities, business cycle, Carl Icahn, carried interest, collateralized debt obligation, corporate governance, corporate raider, credit crunch, deal flow, diversification, diversified portfolio, financial engineering, fixed income, Future Shock, Gordon Gekko, independent contractor, junk bonds, low interest rates, margin call, Menlo Park, Michael Milken, mortgage debt, new economy, Northern Rock, risk tolerance, Rod Stewart played at Stephen Schwarzman birthday party, Sand Hill Road, Savings and loan crisis, sealed-bid auction, Silicon Valley, sovereign wealth fund, Teledyne, The Predators' Ball, éminence grise

If a buyout firm could put more debt on the company so that any gain in the company’s value was magnified in the value of its stock, companies began to ask themselves, why couldn’t we do the same to give our public shareholders a higher return on their shares? In some cases, hedge funds and other activist investors urged companies to perform their own dividend recaps, borrowing more money to pay a dividend or to buy in some of their shares. The sheer magnitude of the funds and the deals had another side effect on the business, one that troubled some investors. The fixed 1.5 percent to 2 percent management fees the firms charged their investors, and the transaction fees they tacked on when they bought or sold a company, had grown so large in absolute dollar terms that they had become a wellhead of income at large private equity houses, rather than just a way of ensuring that some money was coming in the door in tough times.


pages: 483 words: 143,123

The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters by Gregory Zuckerman

activist fund / activist shareholder / activist investor, addicted to oil, Alan Greenspan, American energy revolution, Asian financial crisis, Bakken shale, Bear Stearns, Bernie Sanders, Buckminster Fuller, Carl Icahn, corporate governance, corporate raider, credit crunch, energy security, Exxon Valdez, Great Leap Forward, housing crisis, hydraulic fracturing, Kickstarter, LNG terminal, man camp, margin call, Maui Hawaii, North Sea oil, oil rush, oil shale / tar sands, oil shock, peak oil, Peter Thiel, reshoring, self-driving car, Silicon Valley, sovereign wealth fund, Steve Jobs, Timothy McVeigh, urban decay

Either way, the publicity helped pressure New York State officials to maintain the moratorium on fracking in the state and it helped focus national attention on the drilling, dealing a public relations blow to those in the business. • • • In late 2010, billionaire investor Carl Icahn disclosed that he had purchased nearly 6 percent of Chesapeake’s shares. Icahn is a so-called activist investor, or someone who buys big chunks of a company and then levies pressure on its management to enact changes aimed at getting shares higher. Weeks later, Icahn reached out to McClendon to let him know the company had piled on too much debt. McClendon got the message. Chesapeake quickly announced plans to sell $5 billion in assets, including a deal to sell a one-third interest in its acreage in Wyoming to China National Offshore Oil Corporation, China’s largest offshore oil producer, helping Chesapeake reduce its debt.


pages: 575 words: 140,384

It's Not TV: The Spectacular Rise, Revolution, and Future of HBO by Felix Gillette, John Koblin

activist fund / activist shareholder / activist investor, Airbnb, Amazon Web Services, AOL-Time Warner, Apollo 13, Big Tech, bike sharing, Black Lives Matter, Burning Man, business cycle, call centre, cloud computing, coronavirus, corporate governance, COVID-19, data science, disruptive innovation, Dissolution of the Soviet Union, Donald Trump, Elon Musk, Erlich Bachman, Exxon Valdez, fake news, George Floyd, Jeff Bezos, Keith Raniere, lockdown, Menlo Park, multilevel marketing, Nelson Mandela, Netflix Prize, out of africa, payday loans, peak TV, period drama, recommendation engine, Richard Hendricks, ride hailing / ride sharing, risk tolerance, Robert Durst, Ronald Reagan, Saturday Night Live, self-driving car, shareholder value, Sheryl Sandberg, side hustle, Silicon Valley, Silicon Valley startup, Stephen Hawking, Steve Jobs, subscription business, tech billionaire, TechCrunch disrupt, TikTok, Tim Cook: Apple, traveling salesman, unpaid internship, upwardly mobile, urban decay, WeWork

Nancy Lesser, the network’s West Coast communications maestro and a master awards campaigner, would leave a few months later, bringing to a halt her thirty-five-year run of tirelessly networking in Hollywood on HBO’s behalf. Meanwhile, with its massive debt piling up, AT&T was confronted with a major nuisance on Wall Street. Elliott Management, a hedge fund led by the fearsome activist investor Paul Singer, was quietly amassing a $3.2 billion stake in AT&T. In September 2019, Elliott Management went public with a scathing letter, eviscerating AT&T’s management and, in particular, its handling of the Time Warner acquisition. The letter highlighted the high rate of leadership turnover at HBO and other WarnerMedia assets, which it called “alarming,” given AT&T’s lack of experience in entertainment.


pages: 829 words: 229,566

This Changes Everything: Capitalism vs. The Climate by Naomi Klein

"World Economic Forum" Davos, 1960s counterculture, activist fund / activist shareholder / activist investor, An Inconvenient Truth, Anthropocene, battle of ideas, Berlin Wall, Big Tech, big-box store, bilateral investment treaty, Blockadia, Boeing 747, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, carbon tax, clean tech, clean water, Climategate, cognitive dissonance, coherent worldview, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, degrowth, deindustrialization, dematerialisation, different worldview, Donald Trump, Downton Abbey, Dr. Strangelove, electricity market, energy security, energy transition, equal pay for equal work, extractivism, Exxon Valdez, failed state, fake news, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, gentrification, geopolitical risk, global supply chain, green transition, high-speed rail, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Jones Act, Kickstarter, Kim Stanley Robinson, land bank, light touch regulation, man camp, managed futures, market fundamentalism, Medieval Warm Period, Michael Shellenberger, military-industrial complex, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, ocean acidification, off-the-grid, offshore financial centre, oil shale / tar sands, open borders, patent troll, Pearl River Delta, planetary scale, planned obsolescence, post-oil, precautionary principle, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, remunicipalization, renewable energy transition, Ronald Reagan, Russell Brand, scientific management, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, Ted Nordhaus, TED Talk, the long tail, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, vertical integration, Virgin Galactic, wages for housework, walkable city, Washington Consensus, Wayback Machine, We are all Keynesians now, Whole Earth Catalog, WikiLeaks

Indeed the day the Copenhagen summit concluded—when the target was made official—the share prices of some of the largest fossil fuel companies hardly reacted at all.61 Clearly, intelligent investors had determined that the promises governments made in that forum were nothing to worry about—that they were not nearly as important as the actions of their powerful energy departments back home that grant mining and drilling permits. Indeed in March 2014, ExxonMobil confirmed as much when the company came under pressure from activist shareholders to respond to reports that much of its reserves would become stranded assets if governments kept promises to keep warming below 2 degrees by passing aggressive climate legislation. The company explained that it had determined that restrictive climate policies were “highly unlikely” and, “based on this analysis, we are confident that none of our hydrocarbon reserves are now or will become ‘stranded.’ ”62 Those working inside government understand these dynamics all too well.


Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, book value, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, Cornelius Vanderbilt, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, flying shuttle, Glass-Steagall Act, Gordon Gekko, Henri Poincaré, Henry Singleton, high net worth, impact investing, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, John Bogle, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, margin call, means of production, Menlo Park, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Performance of Mutual Funds in the Period, Ponzi scheme, Post-Keynesian economics, price mechanism, principal–agent problem, profit maximization, proprietary trading, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Sand Hill Road, Savings and loan crisis, seminal paper, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, tail risk, technology bubble, Teledyne, The Wealth of Nations by Adam Smith, time value of money, tontine, too big to fail, transaction costs, two and twenty, underbanked, Vanguard fund, working poor, yield curve

Might the carried-interest feature cause certain stewards to treat it like a call option and invest in circumstances that are “heads I win, tails you lose”? Might there be opportunities for making corporate boards more shareholder friendly and reducing some cases of corporate abuses? Certainly, activist investors to some degree are pursuing such enhanced governance structures, but there is work that remains to be done. Small investors, too, must increasingly have access to mechanisms that ensure that their interests are aligned with either the managers they hire or the corporate heads who oversee the operations of the companies they purchase.


pages: 505 words: 161,581

The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley by Jimmy Soni

activist fund / activist shareholder / activist investor, Ada Lovelace, AltaVista, Apple Newton, barriers to entry, Big Tech, bitcoin, Blitzscaling, book value, business logic, butterfly effect, call centre, Carl Icahn, Claude Shannon: information theory, cloud computing, Colonization of Mars, Computing Machinery and Intelligence, corporate governance, COVID-19, crack epidemic, cryptocurrency, currency manipulation / currency intervention, digital map, disinformation, disintermediation, drop ship, dumpster diving, Elon Musk, Fairchild Semiconductor, fear of failure, fixed income, General Magic , general-purpose programming language, Glass-Steagall Act, global macro, global pandemic, income inequality, index card, index fund, information security, intangible asset, Internet Archive, iterative process, Jeff Bezos, Jeff Hawkins, John Markoff, Kwajalein Atoll, Lyft, Marc Andreessen, Mark Zuckerberg, Mary Meeker, Max Levchin, Menlo Park, Metcalfe’s law, mobile money, money market fund, multilevel marketing, mutually assured destruction, natural language processing, Network effects, off-the-grid, optical character recognition, PalmPilot, pattern recognition, paypal mafia, Peter Thiel, pets.com, Potemkin village, public intellectual, publish or perish, Richard Feynman, road to serfdom, Robert Metcalfe, Robert X Cringely, rolodex, Sand Hill Road, Satoshi Nakamoto, seigniorage, shareholder value, side hustle, Silicon Valley, Silicon Valley startup, slashdot, SoftBank, software as a service, Startup school, Steve Ballmer, Steve Jobs, Steve Jurvetson, Steve Wozniak, technoutopianism, the payments system, transaction costs, Turing test, uber lyft, Vanguard fund, winner-take-all economy, Y Combinator, Y2K

In a 2002 talk at Stanford, a questioner asked Thiel what advice he had for PayPal. “The larger market is off eBay,” he said, “and they should develop a lot of product features and functionalities that enable point-to-point payments in a non-eBay context.” The PayPal independence movement picked up steam, thanks to activist investor Carl Icahn. In 2013, Icahn took a significant stake in eBay and began to push it to spin off PayPal. In its January 2014 quarterly report, eBay responded: “Regarding Mr. Icahn’s separation proposal, eBay’s Board of Directors… does not believe that breaking up the company is the best way to maximize shareholder value.”


pages: 829 words: 187,394

The Price of Time: The Real Story of Interest by Edward Chancellor

"World Economic Forum" Davos, 3D printing, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, asset allocation, asset-backed security, assortative mating, autonomous vehicles, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, bitcoin, blockchain, bond market vigilante , bonus culture, book value, Bretton Woods, BRICs, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cashless society, cloud computing, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, commodity super cycle, computer age, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cryptocurrency, currency peg, currency risk, David Graeber, debt deflation, deglobalization, delayed gratification, Deng Xiaoping, Detroit bankruptcy, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, double entry bookkeeping, Elon Musk, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, everywhere but in the productivity statistics, Extinction Rebellion, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global reserve currency, global supply chain, Goodhart's law, Great Leap Forward, green new deal, Greenspan put, high net worth, high-speed rail, housing crisis, Hyman Minsky, implied volatility, income inequality, income per capita, inflation targeting, initial coin offering, intangible asset, Internet of things, inventory management, invisible hand, Japanese asset price bubble, Jean Tirole, Jeff Bezos, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, land bank, large denomination, Les Trente Glorieuses, liquidity trap, lockdown, Long Term Capital Management, low interest rates, Lyft, manufacturing employment, margin call, Mark Spitznagel, market bubble, market clearing, market fundamentalism, Martin Wolf, mega-rich, megaproject, meme stock, Michael Milken, Minsky moment, Modern Monetary Theory, Mohammed Bouazizi, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, Northern Rock, offshore financial centre, operational security, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, peer-to-peer lending, pensions crisis, Peter Thiel, Philip Mirowski, plutocrats, Ponzi scheme, price mechanism, price stability, quantitative easing, railway mania, reality distortion field, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk free rate, risk tolerance, risk/return, road to serfdom, Robert Gordon, Robinhood: mobile stock trading app, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, Second Machine Age, secular stagnation, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, subprime mortgage crisis, Suez canal 1869, tech billionaire, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Haywood, time value of money, too big to fail, total factor productivity, trickle-down economics, tulip mania, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Walter Mischel, WeWork, When a measure becomes a target, yield curve

Short-term investors, bankers and senior corporate executives benefit from this financial engineering, but no one else is better off. The impulse for buybacks also came from outside the firm. Companies that underperformed in the stock market became takeover targets for competitors or private equity firms. Hedge funds, with their outsize performance fees, had a strong incentive to promote buybacks. ‘Activist’ investors launched publicity campaigns and proxy battles to push managements into buying back still more shares. Even the most profitable companies, such as Apple, attracted their attentions. When Apple repurchased its shares, the iPhone-maker chose to borrow rather than spend the billions of dollars of cash on its balance sheet.


pages: 772 words: 203,182

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, benefit corporation, Black Swan, blood diamond, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, company town, compensation consultant, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Glass-Steagall Act, Gordon Gekko, Greenspan put, hiring and firing, Ida Tarbell, income inequality, independent contractor, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, Money creation, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, Paul Volcker talking about ATMs, pension reform, performance metric, Pershing Square Capital Management, pirate software, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, rolling blackouts, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, stock buybacks, subprime mortgage crisis, The Chicago School, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Stancata, Stephane Cote, Rodolfo Mendoza-Denton, and Dacher Keltner, “Higher Social Class Predicts Increased Unethical Behavior,” Proceeds of the National Academy of Sciences, February 27, 2012. 15 For example, see: Randall Morck, Andrie Shleifer, and Robert Vishny, “Alternative Mechanisms for Corporate Control,” American Economic Review, 1989, 79:842–852. 16 Ian Austen, “Shake-Up at Canadian Pacific Railway As Activist Investor Takes Control,” New York Times, May 18, 2012. 17 Peter Whoriskey, “The Lake Wobegon Effect Lifts CEO’s Pay,” Washington Post, Oct. 4, 2011, and Ryan Chittum, “Cronyism and Executive Compensation,” The Audit, Columbia Journalism Review, Oct. 4, 2011. 18 Whoriskey, Ibid. 19 Heather Landy, “Executives Took, But the Directors Gave,” New York Times, April 5, 2009. 20 David Cay Johnston, Perfectly Legal, 2003, 250. 21 David Carr, “Why Not Occupy Newsrooms?


pages: 650 words: 204,878

Reminiscences of a Stock Operator by Edwin Lefèvre, William J. O'Neil

activist fund / activist shareholder / activist investor, bank run, behavioural economics, Black Monday: stock market crash in 1987, book value, British Empire, business process, buttonwood tree, buy and hold, buy the rumour, sell the news, clean water, Cornelius Vanderbilt, cotton gin, Credit Default Swap, Donald Trump, fiat currency, Ford Model T, gentleman farmer, Glass-Steagall Act, Hernando de Soto, margin call, Monroe Doctrine, new economy, pattern recognition, Ponzi scheme, price stability, refrigerator car, Reminiscences of a Stock Operator, reserve currency, short selling, short squeeze, technology bubble, tontine, trade route, transcontinental railway, traveling salesman, Upton Sinclair, yellow journalism

Keene did not give up as his pool continued to accumulate shares. In 1902, after Harriman reiterated his position, Keene countered by leaking stories to the press and threatening to remove the Southern Pacific’s management unless a 4% dividend was declared.8 Harriman was irritated, just as today’s executives are by activist investors, and “went gunning for Keene,” according to Lefevre.9 The battle was settled by a court ruling in 1903, resulting in heavy losses for Keene and his associates.10 Lefevre accounted for Keene’s defeat this way: “Harriman was many things besides a stock operator, while Keene was only the greatest stock speculator that ever lived in the United States.


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

activist fund / activist shareholder / activist investor, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , bonus culture, Bretton Woods, business climate, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, Glass-Steagall Act, God and Mammon, Golden arches theory, Gordon Gekko, greed is good, Hyman Minsky, income inequality, industrial research laboratory, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, plutocrats, price stability, principal–agent problem, profit motive, proprietary trading, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game

Haldane at the 45th annual conference of the Federal Reserve Bank of Chicago. 41 Figures from ‘A Leaf Being Turned’, a speech by Andrew G. Haldane given to Occupy Economics at Friends House, Euston, London, 2012. 42 Address at Trinity Church in Lower Manhattan on the first anniversary of the 2001 attacks on the Twin Towers. 43 A notable exception was Eric Knight of the activist fund management group Knight Vinke. He pointed out, in his campaign to improve performance at HSBC, that the underlying return on HSBC’s assets was stagnant and that return on equity was a misleading indicator of performance. With hindsight, it has to be said that his choice of target was less than inspired, given that HSBC survived the financial crisis better than most.


pages: 318 words: 93,502

The Two-Income Trap: Why Middle-Class Parents Are Going Broke by Elizabeth Warren, Amelia Warren Tyagi

activist fund / activist shareholder / activist investor, business climate, Columbine, declining real wages, equal pay for equal work, feminist movement, financial independence, labor-force participation, late fees, low interest rates, McMansion, mortgage debt, new economy, New Journalism, payday loans, restrictive zoning, Savings and loan crisis, school choice, school vouchers, telemarketer, urban sprawl, women in the workforce

New York Times, November 2, 1997; Tim Whitmire, “Tapes Don’t Stick in Court: Ex-Texaco Executives Walk,” Chicago Sun-Times, May 13, 1998. 108 See chapter 1, note 10, and chapter 5, notes 17 and 21, for more information on these calculations. 109 Letter from American Association of University Women, Children NOW, Children’s Defense Fund, Center for Law and Social Policy (CLASP), Feminist Majority Foundation, National Association of Commissions for Women (NACW), National Center for Youth Law, National Organization for Women, National Partnership for Women and Families, National Women’s Conference, National Women’s Law Center, National Youth Law Center, NOW Legal Defense and Education Fund, OWL, The Women Activist Fund, Inc., Wider Opportunities for Women, Women Employed, Women Work!, Women’s Law Center of Maryland, Inc., YWCA of the USA, March 2, 2000 (on file with the authors). The leading organizations are the National Women’s Law Center, the NOW Legal Defense and Education Fund, and the National Partnership for Women and Families. 110 There was a glossy photograph of Senator Biden in the NOW Legal Defense annual report, which is sent to thousands of politically active women.


pages: 825 words: 228,141

MONEY Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins

"World Economic Forum" Davos, 3D printing, active measures, activist fund / activist shareholder / activist investor, addicted to oil, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, asset allocation, backtesting, Bear Stearns, behavioural economics, bitcoin, Black Monday: stock market crash in 1987, buy and hold, Carl Icahn, clean water, cloud computing, corporate governance, corporate raider, correlation does not imply causation, Credit Default Swap, currency risk, Dean Kamen, declining real wages, diversification, diversified portfolio, Donald Trump, estate planning, fear of failure, fiat currency, financial independence, fixed income, forensic accounting, high net worth, index fund, Internet of things, invention of the wheel, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, junk bonds, Kenneth Rogoff, lake wobegon effect, Lao Tzu, London Interbank Offered Rate, low interest rates, Marc Benioff, market bubble, Michael Milken, money market fund, mortgage debt, Neil Armstrong, new economy, obamacare, offshore financial centre, oil shock, optical character recognition, Own Your Own Home, passive investing, profit motive, Ralph Waldo Emerson, random walk, Ray Kurzweil, Richard Thaler, risk free rate, risk tolerance, riskless arbitrage, Robert Shiller, Salesforce, San Francisco homelessness, self-driving car, shareholder value, Silicon Valley, Skype, Snapchat, sovereign wealth fund, stem cell, Steve Jobs, subscription business, survivorship bias, tail risk, TED Talk, telerobotics, The 4% rule, The future is already here, the rule of 72, thinkpad, tontine, transaction costs, Upton Sinclair, Vanguard fund, World Values Survey, X Prize, Yogi Berra, young professional, zero-sum game

He’s been in the trenches many times before, making runs on companies as diverse as US Steel, Clorox, eBay, Dell, and Yahoo. But this time was different: instead of Icahn, a younger fund manager named David Winters was buying stock and leading the charge against Coke’s management. To the dismay of overpaid CEOs everywhere, a new generation of “activist investors” is taking up the fight Icahn started decades ago. Naturally, Carl Icahn has ticked off a lot of corporate dynamos, enemies with big clout in the media. So you’ll often hear his critics saying that he’s only in it for the money, or that he “pumps and dumps” stocks, sacrificing long-term corporate goals for short-term profits.


pages: 976 words: 235,576

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite by Daniel Markovits

8-hour work day, activist fund / activist shareholder / activist investor, affirmative action, algorithmic management, Amazon Robotics, Anton Chekhov, asset-backed security, assortative mating, basic income, Bernie Sanders, big-box store, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, carried interest, collateralized debt obligation, collective bargaining, compensation consultant, computer age, corporate governance, corporate raider, crony capitalism, David Brooks, deskilling, Detroit bankruptcy, disruptive innovation, Donald Trump, Edward Glaeser, Emanuel Derman, equity premium, European colonialism, everywhere but in the productivity statistics, fear of failure, financial engineering, financial innovation, financial intermediation, fixed income, Ford paid five dollars a day, Frederick Winslow Taylor, fulfillment center, full employment, future of work, gender pay gap, gentrification, George Akerlof, Gini coefficient, glass ceiling, Glass-Steagall Act, Greenspan put, helicopter parent, Herbert Marcuse, high net worth, hiring and firing, income inequality, industrial robot, interchangeable parts, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kevin Roose, Kiva Systems, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, Larry Ellison, longitudinal study, low interest rates, low skilled workers, machine readable, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass incarceration, medical residency, meritocracy, minimum wage unemployment, Myron Scholes, Nate Silver, New Economic Geography, new economy, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, payday loans, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, purchasing power parity, rent-seeking, Richard Florida, Robert Gordon, Robert Shiller, Robert Solow, Ronald Reagan, Rutger Bregman, savings glut, school choice, shareholder value, Silicon Valley, Simon Kuznets, six sigma, Skype, stakhanovite, stem cell, Stephen Fry, Steve Jobs, stock buybacks, supply-chain management, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Theory of the Leisure Class by Thorstein Veblen, Thomas Davenport, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, traveling salesman, universal basic income, unpaid internship, Vanguard fund, War on Poverty, warehouse robotics, Winter of Discontent, women in the workforce, work culture , working poor, Yochai Benkler, young professional, zero-sum game

Top managers lost the discretion that a large stock and steady flow of retained earnings supports and faced new pressures to promote their firms’ bottom lines, including in particular by squeezing payrolls for everyone below them. Where the midcentury firm’s insulation from the capital markets had been so effective that “separation of ownership and control” became the organizing ideal of midcentury management, the contemporary firm’s capital structure makes management intensely accountable to activist investors. Second, new legal technologies created the market for corporate control that takeover artists might deploy—routinely rather than just in exceptional cases—to discipline management that failed to maximize shareholder value. The discipline came through many mechanisms, including perhaps most importantly the leveraged buyout—an arrangement whereby an acquirer seeking to take over a firm uses the target firm’s own assets to secure a loan to buy the target’s shares.


pages: 341 words: 104,493

City of Exiles by Alec Nevala-Lee

activist fund / activist shareholder / activist investor, false flag, glass ceiling, side project, Transnistria

At the far end of the room sat James Morley, the man in the portrait, stationed before an array of trading terminals. Rising from his desk, he approached Renata. “Pleased you could make it,” Morley said, extending a hand. “I’ve been looking forward to seeing you again.” “Glad to be here,” Renata said, setting down her bag for the handshake. The manager of the Cheshire Group’s activist fund was trim and tan, wearing a wool suit and worsted tie, and would have been quite handsome were it not for his eyes, which were startlingly like those of a vulture. Renata wondered how much he knew about her situation. She was convinced that her creditors had sources everywhere, and although she had recently taken precautions to ensure that her staff remained loyal, it was impossible to silence the rumors entirely.


pages: 827 words: 239,762

The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, Apollo 13, barriers to entry, Bayesian statistics, Bear Stearns, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business cycle, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, compensation consultant, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, disruptive innovation, Donald Trump, eat what you kill, Fairchild Semiconductor, family office, financial engineering, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global pandemic, Gordon Gekko, hiring and firing, Ida Tarbell, impact investing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, Kōnosuke Matsushita, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, Michael Milken, new economy, obamacare, oil shock, pattern recognition, performance metric, Pershing Square Capital Management, Peter Thiel, planned obsolescence, plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sam Altman, Sand Hill Road, Saturday Night Live, scientific management, shareholder value, Sheryl Sandberg, Silicon Valley, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steve Jurvetson, survivorship bias, TED Talk, The Nature of the Firm, the scientific method, Thorstein Veblen, Tragedy of the Commons, union organizing, urban renewal, vertical integration, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator

The “risks” one takes in hedge fund land only extend so far. When too many bets go against you, you move on—an experience not too distant from pretending one is a CEO in a case study. Not long after that, Ackman founded Pershing Square with a $50 million investment from Leucadia National Corporation. He also refashioned himself into an activist investor. Fights against the managements of Target and JCPenney followed. When betting against the nutritional supplement maker Herbalife, Ackman referred to it as a “moral obligation” and has otherwise insisted that his investments are guided by a strict moral code.29 And, incidentally, defended through schoolyard taunts.


pages: 572 words: 124,222

San Fransicko: Why Progressives Ruin Cities by Michael Shellenberger

activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, anti-communist, Bay Area Rapid Transit, Bernie Sanders, Black Lives Matter, business climate, centre right, coronavirus, correlation does not imply causation, COVID-19, crack epidemic, dark triade / dark tetrad, defund the police, delayed gratification, desegregation, Donald Trump, drug harm reduction, gentrification, George Floyd, Golden Gate Park, green new deal, Haight Ashbury, housing crisis, Housing First, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, mandatory minimum, Marc Benioff, mass incarceration, meta-analysis, Michael Shellenberger, microaggression, opioid epidemic / opioid crisis, Peoples Temple, Peter Pan Syndrome, pill mill, RAND corporation, randomized controlled trial, remote working, rent control, Ronald Reagan, Salesforce, San Francisco homelessness, Savings and loan crisis, Silicon Valley, single-payer health, social distancing, South of Market, San Francisco, Steven Pinker, tech billionaire, tech bro, tech worker, The Death and Life of Great American Cities, walkable city

Since the beginning of the new century, moderate Democrats have seen their power decline against progressive Democrats, in San Francisco and around the country. Even when moderates are in charge, progressives have exercised their powers in other ways. Progressive members of the Seattle City Council, Los Angeles City Council, and San Francisco Board of Supervisors, and other political officials, often with the significant support from nonprofit activists funded by local governments, have attacked mayors as uncaring. Growing progressive power culminated in the election of Chesa Boudin in 2019, the Seattle Capitol Hill Occupied Protest of 2020, and demands that the homeless, mentally ill, and substance abusers be immune from prosecution in 2021. It’s true that moderate Democrats control the executive branches of the local, state, and federal governments, but they have little to speak of as an agenda beyond being less radical than the radical left.


pages: 474 words: 130,575

Surveillance Valley: The Rise of the Military-Digital Complex by Yasha Levine

23andMe, activist fund / activist shareholder / activist investor, Adam Curtis, Airbnb, AltaVista, Amazon Web Services, Anne Wojcicki, anti-communist, AOL-Time Warner, Apple's 1984 Super Bowl advert, bitcoin, Black Lives Matter, borderless world, Boston Dynamics, British Empire, Californian Ideology, call centre, Charles Babbage, Chelsea Manning, cloud computing, collaborative editing, colonial rule, company town, computer age, computerized markets, corporate governance, crowdsourcing, cryptocurrency, data science, digital map, disinformation, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, drone strike, dual-use technology, Edward Snowden, El Camino Real, Electric Kool-Aid Acid Test, Elon Musk, end-to-end encryption, fake news, fault tolerance, gentrification, George Gilder, ghettoisation, global village, Google Chrome, Google Earth, Google Hangouts, Greyball, Hacker Conference 1984, Howard Zinn, hypertext link, IBM and the Holocaust, index card, Jacob Appelbaum, Jeff Bezos, jimmy wales, John Gilmore, John Markoff, John Perry Barlow, John von Neumann, Julian Assange, Kevin Kelly, Kickstarter, Laura Poitras, life extension, Lyft, machine readable, Mark Zuckerberg, market bubble, Menlo Park, military-industrial complex, Mitch Kapor, natural language processing, Neal Stephenson, Network effects, new economy, Norbert Wiener, off-the-grid, One Laptop per Child (OLPC), packet switching, PageRank, Paul Buchheit, peer-to-peer, Peter Thiel, Philip Mirowski, plutocrats, private military company, RAND corporation, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, slashdot, Snapchat, Snow Crash, SoftBank, speech recognition, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Susan Wojcicki, Telecommunications Act of 1996, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Hackers Conference, Tony Fadell, uber lyft, vertical integration, Whole Earth Catalog, Whole Earth Review, WikiLeaks

“The main concern here is not falling under the definition of Internet Service Provider or telecommunications carrier which would subject Tor to CALEA compliance regulations.” CALEA was the legally mandated FBI surveillance tap that every network provider had to install. Ibid. 105. Burma was a curious place for American antisurveillance activists funded by a CIA spinoff to travel to, considering that it has long been a target of US regime change campaigns. In fact, the guru of pro-Western “color revolutions” (Sheryl Gay Stolberg, “Shy U.S. Intellectual Created Playbook Used in a Revolution,” New York Times, February 16, 2011), Gene Sharp, wrote his famous guide to nonviolent revolutions, From Dictatorship to Democracy, initially as an insurgency guide for Burma’s opposition movement to help the US overthrow the military junta in the late 1980s.


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

"Friedman doctrine" OR "shareholder theory", Abraham Wald, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Andrei Shleifer, AOL-Time Warner, asset allocation, asset-backed security, bank run, beat the dealer, behavioural economics, Benoit Mandelbrot, Big Tech, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Carl Icahn, Cass Sunstein, collateralized debt obligation, compensation consultant, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, democratizing finance, Dennis Tito, discovery of the americas, diversification, diversified portfolio, Dr. Strangelove, Edward Glaeser, Edward Thorp, endowment effect, equity risk premium, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Glass-Steagall Act, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Bogle, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, market design, Michael Milken, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, power law, prediction markets, proprietary trading, prudent man rule, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, rolodex, Ronald Reagan, seminal paper, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Skinner box, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, tech worker, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, Two Sigma, Tyler Cowen, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

It all came to a head during the economic downturn of the early 1990s. Many big American corporations struggled, as they had during previous recessions in the 1970s and early 1980s. This time around, institutional shareholders showed little patience with CEOs who couldn’t deliver a quick turnaround. Monks, who had sold ISS and started an activist fund called Lens, tried to get himself elected to the board of Sears to express his frustration with the retailer’s direction. He failed, but Sears soon made many of the changes he had recommended. At Calpers, Hanson began pressuring boards to remove underperforming CEOs. In 1991 and 1992, CEOs targeted by Calpers and other institutions were thrown out at Westinghouse, American Express, and General Motors.


pages: 1,544 words: 391,691

Corporate Finance: Theory and Practice by Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann le Fur, Antonio Salvi

"Friedman doctrine" OR "shareholder theory", accelerated depreciation, accounting loophole / creative accounting, active measures, activist fund / activist shareholder / activist investor, AOL-Time Warner, ASML, asset light, bank run, barriers to entry, Basel III, Bear Stearns, Benoit Mandelbrot, bitcoin, Black Swan, Black-Scholes formula, blockchain, book value, business climate, business cycle, buy and hold, buy low sell high, capital asset pricing model, carried interest, collective bargaining, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, currency risk, delta neutral, dematerialisation, discounted cash flows, discrete time, disintermediation, diversification, diversified portfolio, Dutch auction, electricity market, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, fixed income, Flash crash, foreign exchange controls, German hyperinflation, Glass-Steagall Act, high net worth, impact investing, implied volatility, information asymmetry, intangible asset, interest rate swap, Internet of things, inventory management, invisible hand, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, lateral thinking, London Interbank Offered Rate, low interest rates, mandelbrot fractal, margin call, means of production, money market fund, moral hazard, Myron Scholes, new economy, New Journalism, Northern Rock, performance metric, Potemkin village, quantitative trading / quantitative finance, random walk, Right to Buy, risk free rate, risk/return, shareholder value, short selling, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stocks for the long run, supply-chain management, survivorship bias, The Myth of the Rational Market, time value of money, too big to fail, transaction costs, value at risk, vertical integration, volatility arbitrage, volatility smile, yield curve, zero-coupon bond, zero-sum game

Because of new regulations on corporate governance (see Chapter 43), they vote at AGMs more frequently, especially to defeat resolutions they do not like (share issues without pre-emption rights, voting limits, stock option plans that are too generous, excessive compensation, etc.). Some of them have started to play a far more active role and are called activist funds. They publicly put pressure on underperforming management teams, suggesting corrective measures to improve value creation. In 2016, one of them, Muddy Waters, pushed Casino to sell its Asian assets to reduce its debt load. (e) Financial holding companies Large European financial holding companies such as Deutsche Bank, Paribas, ­Mediobanca, Société Générale de Belgique, etc. played a major role in creating and financing large groups.

Top 20 Largest Listed Companies Contents Index abandon, option to abandonment risk abstract data accelerated book-building accelerating treadmills account balancing account statement accounting criteria financing choice share issue value creation accounting currency risk accounting data analysis accounting documents accounting indicators, value creation accounting policy assessment accounting rates of return accounting standpoint complex points deferred tax accounting values, equity/debt accounts see bank accounts accounts payable accretion accruals accrued interest acquisition facility acquisitions goodwill and real estate shareholders’ equity shares tax implications see also mergers and acquisitions actions de préférence activist funds actuarial present value additive methods, valuation additivity of value adjustable-rate preference share “adjusted income” adjustment of investor’s risk per share data adjustment coefficient “adjustment factor” ADRs see American depository receipts advance payment advice and services affirmative covenants after-tax basis debt investments ROCE calculation “agency costs” agency theory bankruptcy corporate governance dividends leveraged buyout risk management shareholder structure AGM see Annual General Meeting agreement in principle all-share deals allocation of shares, IPOs ALRG see asset liability refinancing gap alternative management Altman, Edward American depository receipts (ADRs) amortisation brands cash flow statement finance leases loans operating profit Annual General Meeting (AGM) annuity value anticipation mechanism, share issue apparent cost appraisal clause, joint venture agreements approval rights, shareholder changes APT see arbitrage pricing theory arbitrage investor’s behaviour option pricing value additivity rule working capital management arbitrage pricing theory (APT) ArcelorMittal case study arithmetic calculation, cost of capital arm’s-length transactions arranger, bank as articles of association artificial intelligence Asian options (average strike options) assessment accounting policy earnings power financial analysis residual risk asset-backed loans “asset dealers” asset disposal asset liability refinancing gap (ALRG) asset management asset value capital structure financial securities per share assets beta of capital losses consolidated accounts contributed deferred tax discounting rate and financing linked to illiquidity risk investments legal merger liquidating liquidity perspective off-balance-sheet real estate real versus financial assets revaluing risk strike price underlying see also financial assets; fixed assets; net assets assimilation, bonds associated undertakings associates income from investments in asymmetry of information asymmetry of risk at the money options attached warrants, securities auctions “automated” financial analyses average maturity, bonds average rate, shares average strike options avoidance principle, risk management back-stops, bought deals “backdoor equity” hypothesis backup lines, commercial paper balance of power balance sheet analysis methods cash on concepts consolidated accounts deferred tax assets/liabilities defined benefit plans definitions forward rate agreement intermediation leverage effect liquidity main items working capital Bancel–Perrotin system bank accounts balancing without secondary market bank-based economies bank charges bank debt products bank financing bank guarantees see also guarantees bank loans bank terms, checking banking covenants bankruptcy capital structure policy causes distress cost financial theory illiquidity risk LBO exit procedures restructuring and bankruptcy costs banks cash management company finance dividend payments free riders offering position relationship with companies restructuring role in security sales takeover role barrier interest rate options barrier options barriers to entry bearish markets before-tax free cash flow behavioural finance cash management entrepreneurs IPO success manager’s character mergers and acquisitions theoretical framework benchmarking Benveniste, I.


pages: 710 words: 164,527

The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, business cycle, capital controls, Charles Lindbergh, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, lateral thinking, low interest rates, margin call, means of production, Michael Milken, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, Nixon triggered the end of the Bretton Woods system, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, public intellectual, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, Suez canal 1869, Suez crisis 1956, The Great Moderation, the market place, trade liberalization, Works Progress Administration

Vinson, Keynes wrote to Dalton, “rail-road[ed] this decision through the Conference, vocally supported (as became usual) by a pathetic procession of stooges, of which Ethiopia (represented by an American banker), Salvador, Guatemala, Mexico and China were prominent, with most of the rest discreetly silent.”20 As important as the symbolism of location was, the more substantive issue to be resolved was the role of the directors, particularly those of the fund. Given their vision of an activist fund, working to correct national policies that were creating dangerous international financial imbalances, the Americans insisted that the directors be full-time and well remunerated, with a large battalion of specialist technical staff behind them. The British, who wanted a fund that was more like an automatic credit mechanism than a nosy new American-dominated bureaucracy with a mind of its own, countered that its directors should already have important day jobs in their own governments or central banks; their role in the fund should be only part-time, mainly ensuring that their respective countries’ national interests were protected.