Author Topic: Dear Chrm: Boardroom Battles and the Rise of Shareholder Activism - Jeff Gramm  (Read 7978 times)

handycap5

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Highly recommend this book.

One tidbit I found fascinating. When Buffett built his huge American Express position, the holders of the stock at that time did not have limited liability AND he didn't tell his partnership investors he bought it for them until year-end. Incredible self-confidence. Maybe in the grey in terms of investor communication (many of his investors at that time were not "sophisticated."), but of course it worked out.


Peregrino

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The biggest advertisement for the need for shareholder activism is the ongoing disparity between the returns achieved by public market investors (mid single digits, though not for the members of cob&f) and those achieved by private equity (high teens, net). 

Some of the differential can be explained by time arbitrage, and some can be explained by leverage, I suppose, but increasingly it is becoming clear that unless we public market shareholders do more, private equity will keep eating our lunch. 

These are the same companies, facing the same macro environment, and yet more and more money is being handed to private equity, locked up for decades, and drowned in fees.  If someone would only be more engaged, and disciplined enough to hold off trading something just because they can, those returns could be ours!

I read presentations on stocks and see analysts noting possible PE interest in a name as a potential catalyst to the upside and I think, "Wake up!  If you're right, that guy's going to get 20% a year out of that name even at the stepped up valuation you've pinned your hopes on and your big dream is taking your pennies and walking away sated?  Don't just hand it to him!"

Alas...

longinvestor

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Good book! I have always stayed with the headlines on popular acts of shareholder activism. This book really has opened my eyes to the role of activism in keeping management honest. Just as the last poster Peregrino says, we-the-shareholders certainly need more activism and more frequently than has happened over the past 30 years. Public companies are fewer than 4000, down from over 10000(?) in this period. Between almost non-existent management ownership interest (as in putting your own money in your company) and the apathy associated with the 70% institutional ownership(on easy street of fee-without-consequence), it is kind of a bonhomie at public companies! No one “owns” anything.Well, I do😉

I will be reading Dear Chairman letters beyond the headlines! Thanks to Gramm.
« Last Edit: January 18, 2020, 06:05:54 PM by longinvestor »