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The Good Barbarian: How Icahn, Ackman, and Loeb Became Shareholder Heroes

Carl Icahn outside of the Nasdaq MarketSite with Robert Greifeld, chief executive officer and president of Nasdaq OMX Group
Carl Icahn outside of the Nasdaq MarketSite with Robert Greifeld, chief executive officer and president of Nasdaq OMX Group Photograph by Scott Eells/Bloomberg

It has been a rewarding week for activist investors. Carl Icahn succeeded in his $2.6 billion bid for CVR Energy on May 7, Bill Ackman picked up some powerful allies for his May 17 proxy battle at Canadian Pacific, and Dan Loeb scored a major victory with the May 13 resignation of Yahoo chief Scott Thompson. Moreover, despite management efforts to paint these hedge fund managers as opportunists, the trio has had public sentiment on their side. While bankers stand accused of hubris and excessive risk-taking, men who have invested billions in public companies with the clear goal of making much more are held up as defenders of the average investor.

A generation ago such investors typically grabbed headlines under a different label: corporate raiders, robber barons, barbarians at the gate. In boardroom dramas, they were cast as the cold, calculating capitalists who ruthlessly used their power to slash jobs, liquidate assets, and destroy venerable brands. Sometimes, management had to buy back shares at inflated rates to dodge a takeover—a form of “greenmail” that helped boost the coffers of such investors as T. Boone Pickens and Icahn himself. In fact, few came to epitomize the scorched-earth tactics of the 1980s quite like Carl Icahn, whether it was forcing BF Goodrich to pay a 25 percent premium on his shares to stop him from buying more or selling off the prized assets of TWA after seizing control. No wonder he was one of the inspirations for Gordon Gekko in the 1987 film Wall Street. (Icahn is widely credited with the line, “If you want a friend, get a dog.”)