The Reluctant Activist!
I was asked to participate on a panel at a Shareholder Activism conference last week. The topic of discussion for our panel was what happens after you as an activist have successfully won a seat or seats on a corporate board. A bit different than the other participants on the panel, I tried to make the following points:
1. I am a reluctant and occasional activist just as I find myself from time to time being a reluctant and occasional investment banker i.e. when the situation calls for me to be. My full time occupation is as a value investor, but these are tools that a value investor needs to have at his disposal to maximize his opportunity in the event that they are required.
2. I only get involved in activist pursuits when there is somebody or something standing in the way of the release of value, or creating a risk of the destruction of value. Sometimes the best decision is simply to sell and move on.
3. There are many things that happen before (or hopefully instead) of having to go the route of a proxy battle in order to influence a situation. There are letters to be written, both private and public. There are other constituents to lobby.
4. Proxy battles are very expensive, and time consuming endeavours.
5. Where possible, I would rather save my energies and encourage another investor to take the activist role.
6. When required, I prefer to nominate trusted colleagues and business associates to a Board, rather than myself. I don't like the trading restrictions, perceived conflicts nor the incremental demands on my time.
7. From time to time I do end up on a Board.
8. Every Board culture and situation is different (like a snowflake another panel member observed). Sometimes people really work together and one plus one actually does equal three. Sometimes the culture is toxic.
9. My biggest successes have been the activist situations where I have avoided taking the central role, rather than the ones I have mucked into.