Fink: Not in Favor of Short-Term Activist Investing

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Feb. 5 (Bloomberg) -- Larry Fink, chairman & CEO at BlackRock, examines the impact of activist investors on Bloomberg Television’s “Market Makers.”

Little bit, talked about carl icahn.

What is your view on activists?

We have to have a different view.

As the largest shareholder of public companies in the world, all the shares before activists are there, and after activists are there.

So, our needs, like most long- term investors, will really look at what they are looking for and, does that help a company over the long-term?

If it is for a short-term pop, because they are buying back large shares and burning the company with huge amounts of that, that may not the -- that sounds like a rabbit equity.

Is that how you view the current rise in activism?

Some are more talking about issuing large pools of debt.

We are all in favor of making companies more efficient.

We are all in favor of making sure whoever that may be, a long-term investor or an activist, is working to have the company performed better over the long term.

If that is the motivation, we are happy working alongside them.

If we find the motivation was just to get a quick pop, and so -- that is not one term by definition.

I cannot be in favor of that.

Blackrock is the world's and largest.

The largest investor.

What is your view on wielding your might as a shareholder?

Let's not call it activism.

Let's call it good governance.

There is a line between what is definitionally good and being an activist.

We have a huge responsibility with the company's pension funds, individuals who have given us their savings and retirement.

They expected us to have a proper return.

We have to worry about those.

We talk about longevity and the meat -- the needs to have proper pools.

We believe we have to be fully engaged with management.

We established a number of years ago a full independent team to work with companies on proxy issues.

We were one of the first firms that did it.

Every year, my letter will go out shortly about what we expect out of companies.

We want to work with companies and management teams.

What are they arts -- what if they are obstinate?

Last year, we voted 18% against management.

So about 82% in favor.

If we are in a disagreement about the management team, we will vote against.

Have management teams reached out for you for guidance?

We recommend they do.

As they are being attacked by the activist investors, that is not the relationship we had from you.

They're asking us, can we get more engaged?

Can you call carl icahn?

Another call later today with a company ceo.

We would love to listen.

Anyway, our job is making sure we are fully engaged in a dialogue continually.

We want to be engaged with these management teams, even without activists.

Our job is to make sure the company is performing properly over a long cycle.

People like to say if you do not like it, you can sell the stock.

I cannot.

Let him make that point.

Active investors come if they do not like the management, they sell.

This is why we have a higher responsibility.

A large component of our shares are in index funds.

Why not become more active and use the bully pulpit you have to do more than engaged with managements and say, maybe more loudly and more clearly and more publicly, this is what blackrock -- your largest shareholder -- wants you to do.

You are not acting in our best interests.

The best solution, because we wield a lot of shares, is to do it quietly and constructively.

Are you saying you have been doing this all along?

I think my team, because i am personally not involved, my team have done this for a long time.

They -- we have not changed our behavior.

The behavior is to have constructive dialogue.

It is important to have that before a proxy.

Talk to us about what are your issues and come to us about what you are thinking about.

Do not go to the proxy voting companies first.

We want to be engaged with you.

You have the benefit of being the companies's first call.

Turn the clock 20 years, if you were building blackrock, would you be singing a different tune and saying, i need to be an activist investor if i want to make a difference?

That is not my personality.

It is to work and build long- term confidence between management teams and what we represent at blackrock.

Once again, we are worried about long-term outcomes for our investors and long-term retirement.

I cannot just focus on what will be good, even for a year.

I have to focus on what would be

This text has been automatically generated. It may not be 100% accurate.


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