As an activist investor, Carl Icahn of Icahn Enterprises LP (NASDAQ:IEP) has had his fingers in several pies, or companies in other words, ranging from Yahoo! Inc. (NASDAQ:YHOO) to Family Dollar Stores, Inc. (NYSE:FDO) and Hertz Global Holdings, Inc. (NYSE:HTZ). The pertinent question is what differentiates a good activist investor from a bad one, and how do we establish a scale to measure their success?
In an Interview on CNBC, Jack Welch of Jack Welch Management Institute reflected on some of these issues involving corporate activists. He did so by introducing an antihero in the narrative, in the form the hedge fund billionaire Bill Ackman. The hero of course was the Icahn Enterprises LP (NASDAQ:IEP)’s Carl Icahn.
“[…] I don’t like Ackman at Penney, I don’t like Ackman at Target. I don’t like thousands of people, when you are wrong as an activist, you should get hammered, you shouldn’t be able to go off and invest somewhere else, get rich and do all kinds of other things. If you are wrong as an activist, you have injured armies of people for no purpose […],” said Welch.
In Welch’s opinion Carl Icahn has seldom failed in this regard and the success of Icahn Enterprises LP (NASDAQ:IEP) is just one evidence of it. Whether you analyse his old calls such as one involving Yahoo! Inc. (NASDAQ:YHOO), or even the more recent ones which focused on the likes of Family Dollar Stores, Inc. (NYSE:FDO) and Hertz Global Holdings, Inc. (NYSE:HTZ), his track record seems pretty great.
Another very useful input on the topic of corporate activism came recently from Robert Kaplan, professor of management practice at Harvard Business School. In an interview on Bloomberg he said that those activists who focus on portfolio of businesses, capital allocation and governance of their target companies fare much better than those trying to coach the management team or improve the business.
That is perhaps the secret sauce that Carl Icahn has glazed his Icahn Enterprises LP (NASDAQ:IEP) with.
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