(Corrects spelling of discreet in second, fourth paragraph.)
March 12 (Bloomberg) -- Activist investors are playing a more constructive role in corporate America even as boards view them as a potential “nightmare,” said John Studzinski, who heads the merger and acquisitions advisory business at Blackstone Group LP.
“If you were to survey most boards right now they would say their biggest nightmare right now is an activist,” Studzinski said today in an interview with Bloomberg Television’s Erik Schatzker and Stephanie Ruhle. “If the activist is discreet, rigorous, and analytical,” then an activist’s input can help, he said.
Activist investors such as Carl Icahn, Bill Ackman’s Pershing Square Capital Management LP and Barry Rosenstein’s Jana Partners LLC buy shares in companies and then push management to make changes, including selling assets, increasing share buybacks or pursuing mergers. Assets overseen by activist hedge funds increased to $93 billion last year from $65.5 billion in 2012, according to Hedge Fund Research Inc. data cited by Moody’s Investors Service, which said the managers sought changes at 220 North American companies in 2013.
Studzinski, 57, cited Ackman’s work with Procter & Gamble Co., where he successfully pushed for the replacement of Chief Executive Officer Bob McDonald, as evidence of how activists can work discreetly with corporate boards to effect change.
Studzinski has advised activists including Pershing Square on its investments in Canadian Pacific Railway Ltd. and J.C. Penney Co., according to his biography at the Human Rights Watch organization’s website.
Icahn, who this year prodded Apple Inc. to buy back stock, is “a brand unto himself,” Studzinski said. “He arrives and basically says one thing: value. There is value in that stock, buy it. That is a simple brand identity right now and he has built up a fortune, over $20 billion.”
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