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from Breakingviews:

Sony brush-off won’t end Dan Loeb campaign

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The tussle over Sony may be the most courteous shareholder battle ever. Back in May, hedge fund manager Dan Loeb respectfully suggested the company spin off a stake in its entertainment arm. Now the Japanese group’s board has politely rejected the idea. But the activist appears to be digging in for the long haul.

Loeb had argued that a partial listing of Sony Entertainment would improve its performance and help finance Sony’s electronics businesses. But the company concluded a spinoff would throw up barriers between the media and electronics units at a time when content and devices are supposed to be increasingly seamless. Sony’s advisers also cast doubt on the financial logic for a listing. Past experience suggests that the parent company’s shares tend to underperform following a spinoff, while most subsidiaries are eventually re-absorbed by the parent.

The civil brush-off from Sony appears to leave Loeb with few options. Even in a country more receptive to activist investors than Japan, it would not be easy to force a company to list a subsidiary against its will. Sony’s shares fell 5 percent on news of the board’s decision, suggesting investors expect Loeb to walk away. However, he does not appear to be giving up just yet. Though Loeb’s Third Point fund said it was “disappointed” by the board’s decision, it welcomed Sony’s commitment to greater transparency – and promised further ideas for creating value.

from Breakingviews:

Dan Loeb‘s breakup plan deserves Sony’s ear

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dan Loeb is taking Japan’s economic renaissance at face value: the hedge fund manager wants Sony to spin off its entertainment arm. Though activists rarely prevail in Japan, Loeb’s idea may have merits. The electronics giant should take him seriously.

from Breakingviews:

Replacing P&G boss may be Bill Ackman’s best hope

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Procter & Gamble is a hulking target for an uppity investor like Bill Ackman. Typical activist tactics like a breakup won’t work at the $178 billion Pampers-to-Crest giant. New leadership could be one thing to help get P&G back on track, though. Maybe Ackman could even recruit vaunted former Chief Executive A.G. Lafley to help.

from Breakingviews:

Ackman gets closer to permanent capital grail

By Neil Unmack and Jeffrey Goldfarb
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Bill Ackman looks decidedly closer to the holy grail of permanent capital. The founder of activist U.S. hedge fund Pershing Square Capital Management is planning a London-listed vehicle with a market value of at least $4 billion. That would dwarf other public funds, many of which trade at a big discount to net asset value. Ackman’s scale, plus some fee sweeteners, may give him an edge. And his focus on easily priced bets could minimize the NAV problem.

The initial public offering of a new fund, which would invest in Pershing Square’s offshore hedge funds, next year is designed to let Ackman do more of what he does best. The bulk of his 22 percent annualized net return over the last eight years comes from successfully agitating at companies like JCPenney and Fortune Brands. By tapping the market, he wouldn’t need to keep half his assets in cash and other liquid investments, as he does now to accommodate investors who want to exit.

from Breakingviews:

Yahoo activist hasn’t yet earned four board seats

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Activist investor Dan Loeb correctly diagnosed Yahoo’s problem. After the Internet company spurned a juicy bid from Microsoft in 2008 at more than twice its current value and signed away the search business for a pittance, the Third Point founder turned his attention squarely onto the board - and has played a role helping to reform it. But he hasn’t yet provided a sound prescription to cure ailing Yahoo. Until he does, Loeb doesn’t deserve the four seats he wants on the board.

from Breakingviews:

Activist investors embark on fight of their lives

Activist investors generally prefer to be on the attack. So it's odd to see them on the back foot, fighting to preserve an important arrow in their quiver. The Securities and Exchange Commission is weighing whether to curb uppity shareholders from quietly building stakes in companies. The battle should kick into high gear this week when the merger world's top lawyers and bankers hold their annual confab in New Orleans.

It comes down to a question of disclosure. As it stands, investors planning to take an aggressive stance with a company must reveal within 10 calendar days when they accumulate a stake of at least 5 percent. In practice, the rule enables funds to buy considerably more than that before they are obliged to report their positions.

from Breakingviews:

Activist shareholders are back for good reason

Activist shareholders are back -- and for good reason. As the proxy season heats up, pot-stirrers like Carl Icahn and Ron Burkle are raising a fuss at companies from biotech Genzyme  to bookseller Barnes & Nobl. Easy pickings from the credit bubble bursting may be gone. But the activists remain a formidable bunch.

Calpers says its portfolio of funds that challenge underperforming companies has generated an average return of 7.2 percent a year since it started in 1999, compared to an annualized 1 percent loss for the S&P 500 index over the same period. By all rights, the activists' returns should be competed away. Copying the tried-and-true approach shouldn't be difficult to replicate. Buy a slug of a laggard with a pristine balance sheet and demand the company sell itself.

from Breakingviews:

Norway SWF wages lone governance crusade

Norway's $420 billion oil fund is rattling the cage of some of the foreign companies in which it has invested. As a shareholder it deserves praise for putting its head above the parapet. But as a sovereign wealth fund it is treading a fine line.

Norges Bank Investment Management (NBIM) has been stung into action by a combination of domestic political pressure to account for its investments and heavy losses on some parts of its extensive external investment portfolio.

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