Martin Lipton, one of New York’s leading corporate lawyers, is taking aim again at activist investors, claiming that they manipulate the markets and damage the interests of shareholders.
The comments came in an article entitled “The Threat to Shareholders and the Economy from Activist Hedge Funds” that Lipton posted on Harvard Law School‘s Forum on Corporate Governance and Financial Regulation.
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Without directly naming Bill Ackman or Carl Icahn, Lipton essentially took a swipe at them, or at least their style of activism. And this isn’t the first time he’s come out against the two investors, ValueWalk said.
This time around, Lipton collected a list of all the major viewpoints of those who oppose public activist campaigns, and that list is quite long. What’s missing from his list, however, is the viewpoints of those who’ve written in defense of activism, and there are probably just as many of them, the website said.
Lipton said 2014 could essentially be called the “year of the wolf pack” because of how many activist investing campaigns were active. Specifically, he was referring to campaigns by those who pander to the press by seeking widespread publication of their activities, the report said.
There is certainly something to be said about these types of campaigns, as they speak to a certain human desire for excite. In some cases, they’re like a train wreck. We just can’t look away, ValueWalk said.
Unfortunately they also do something else, and that’s manipulate the markets (whether intentionally or not). Of course no activist investor would ever say they’re trying to move the shares of the companies they’re targeting, but it’s a natural effect, the website said.
Investors hear that Bill Ackman or Carl Icahn is up to something, and they want in because they often get things done. But the Ackmans and Icahns of Wall Street know others sit up and take notice when they speak. So it’s natural for some to question where their pure aims to get big companies back on track end, and where their appetite for profits begins, the report said.
There was so much activist investing going on in 2014 that activist investors even began to take swipes at each other. Icahn decried Ackman’s activist tactics, while Jeffrey Ubben of ValueAct Capital called the tactics of some “corrupt” and even said Carl Icahn appeared to just be “entertaining himself rather than creating long-term value for shareholders” in the case of eBay Inc and PayPal, Valuewalk said.
Lipton also called on major institutional investors to stop supporting activist hedge funds, saying he would like to see “legislative, regulatory and judicial actions to dampen their abuses and lessen substantially their impact.”
Lipton and Icahn have fought in boardrooms for decades and seem to relish attacking each other publicly. At a conference last year, Icahn described Lipton as “a witch doctor” for saying activists harm companies without producing what he deemed viable evidence, Crain’s New York Business said.
Last year, Lipton characterized the campaigns undertaken by people like Icahn as “a form of extortion” because they “create short-term increases in the market price of their stock at the expense of long-term value”, Crain’s said.
