From today's WSJ comes a must read column by Dennis Berman in which he argues that:
The vast majority [of shareholder activist funds] are making similar demands of their targets, delivered with what now feels like a dull percussion: Raise the dividend, buy back shares, cut these costs, spin off that division, sell the company.
What’s the average length of an activist shareholding? Some 84% don’t last more than two years, according to FactSet. ...
Here’s a drastic question for a field beset by conformity. Why can’t activists find targets where the misallocation is going the other way? In other words, identify companies that are playing it too safe, perhaps pushing too much into dividends or buybacks. Or missing a great opportunity in a new market. ...
Think about how jarring it would be if Carl Icahn wrote a blistering letter to a management, demanding that it halt a buyback program and plow money into a promising new product. Or if another activist took out full-page ads insisting a company hire 200 more salespeople.
It just doesn’t happen. Consider the database kept by FactSet, which has tracked 3,774 activist campaigns since 2005, and has placed each in one of five categories. There is no such category for “advocating more long-term investment,” says FactSet vice president John Laide. “It’s an extremely rare demand, so we don’t code for it.”
And that's the problem.