Tuesday, July 11, 2017

Irene Rosenfeld summarizes the Pros and Cons of dealing with activist investors

Mondelez International CEO Irene Rosenfeld knows what its like dealing with activist investors. 

She has a history with activist investors like Bill Ackman. In an interview with Business Insider, she said she has learned a lot by engaging with activists and actually listening to what they have to say.

"These guys are smart, they have interesting ideas and I think it’s really productive to engage with them," she said. 

That isn't to say they're always right, however. Some of their demands are focused on the short-term, she said, and as a company CEO she has to find a balance between running the company for the here and now and the future. Activist investors also sometimes forget the human element, she said. 

"I think the single biggest disconnect that I found is that many activists simply sit in conference rooms and do calculations and analysis, independent of the reality of the fact that we are dealing with human beings and people’s lives," she said. "Some of the actions that one might want to take in overhead reduction, for example, can’t be executed at the drop of a hat."

Tuesday, June 20, 2017

Watch out Wall Street, Bill Ackman is determined to bounce back

The biggest investment failure of my career happened in the last 18 months or so. I blame part of that on not managing my time effectively.

I need to make money. Now I’m very focused.

Tuesday, December 20, 2016

Reducing Herbalife shares for tax purposes

Pershing Square sold $51.7 million worth of the troubled Canadian pharmaceutical company’s stock recently, according to regulatory filings. The sale reduced Pershing’s Valeant stake to 7.8 percent from 9 percent. The purpose of the sale was to “generate a tax loss in 2016” for investors, according to the filing. Investors can use losses to offset other gains in their investment portfolios.

"HLF stock has traded down more than 33% since the announcement of the company’s settlement with the FTC on July 15th, 2016, a 15% year-to-date decline, as investors have come to increasingly ignore the company’s fraudulent characterization of the FTC settlement. At its December 2, 2016, price of $47.99 per share, HLF currently trades at approximately the price at which we shorted the shares in 2012."

"Fundamentally, pyramid schemes are confidence games. The CEO exit, deteriorating earnings, the declining stock price, and the John Oliver segment should materially impact Herbalife distributor confidence. When distributors reduce their purchases and/or leave the company, the financial results of the company should decline on an accelerated basis. Furthermore, we believe the injunctive relief demanded by the FTC is likely to significantly impact Herbalife’s financial performance beginning in the second quarter of 2017. Coupled with decelerating growth in many international markets, especially in China, we expect earnings to decline in 2017. We remain short Herbalife because we believe its intrinsic value is zero."

Thursday, November 3, 2016

Pershing Square relocating to Hell's Kitchen

Pershing Square Capital Management, the hedge fund headed by activist investor Bill Ackman, is relocating its headquarters to 787 11th Avenue in Hell’s Kitchen.

According to the Georgetown Company, the firm signed a 15-year lease for 67,000 s/f in the building. The space will be occupied by Pershing Square and the Pershing Square Foundation, the family foundation headed by Ackman and his wife Karen. The firm is expected to move in by late 2017.

“Hell’s Kitchen is a great live, work, play community with wonderful restaurants, services, transportation options and entertainment,” said Adam Flatto, the CEO of The Georgetown Company. “This is a neighborhood that will continue to grow and we’re pleased to welcome Pershing Square to the building.”

The property, which once housed a car dealership, has been redesigned to Ackman’s specifications. The upper floors have been renovated to include a two-story penthouse with a private terrace and a tennis court. According to a previous report from Crain’s, the amenities were part of Ackman’s wish list for the new office. The space was designed by architect Rafael Viñoly.

The Georgetown Company partnered with Ackman and Main Street Advisors to purchase the building in 2015. The deal was valued at $255.5 million.