Sorrell Accuses Activists of Short-Termism in Debate With Singerby
WPP founder made remarks to hedge-fund manager in Davos debate
Paul Singer is founder of activist investor Elliott Management
Martin Sorrell, chief executive officer of WPP Plc, said hedge-fund activists pressure companies for short-term gains in a debate with billionaire money manager Paul Singer Wednesday.
"Activist investors tell us they are long-term not short-term, said Sorrell, speaking at the World Economic Forum’s annual meeting in Davos, Switzerland. “I don’t think that is how they are perceived.”
Singer, who founded New York-based hedge fund firm Elliott Management almost four decades ago, defended his firm’s activism. He said Elliott typically invests for longer than "an average institutional holding of common stocks” when it takes an activist position.
Elliott has one of the best long-term track records in the hedge fund industry and has been a leading holdout creditor in Argentine bonds, a bet it has held for at least 14 years. Its U.S. activist campaigns have mainly focused on enterprise software and hardware technology companies.
Sorrell, who runs London-based communications group WPP, and Singer were appearing side-by-side in a panel discussion titled "Preventing Future Shocks.” Also speaking were Carlos Ghosn, chairman and chief executive officer of Renault-Nissan Alliance and Min Zhu, the International Monetary Fund’s deputy managing director.
Businesses such as those run by Rupert Murdoch and Mark Zuckerberg, where the founders are key shareholders, are best-placed to resist activists since it makes it more difficult for outside investors to build positions, said Sorrell.
Singer said the model of corporate boardroom structure is "broken” in America. "In a lot of cases management picks the board of directors."