How Activist Investors Are Shaping Your Financial Future

What is Shareholder Activism?

If you are a current shareholder of The Walt Disney Company, you may be wondering who Nelson Peltz is and why he wants multiple seats on the board of your holding. Peltz’s Trian Fund owns roughly $2.5 billion, or more than 30 million shares, in the entertainment company, which has been rapidly losing money. We have yet to see what he has in store for Disney, but Trian calls itself a “highly engaged shareowner” that “seeks to invest in high-quality but undervalued and underperforming public companies and to work collaboratively with management teams and boards to help companies execute operational and strategic initiatives designed to drive long-term sustainable earnings growth for the benefit of all shareholders.” Trian thinks that Disney shares are significantly undervalued today and that the company needs a board that is more focused, aligned with shareholders, and accountable.” Time will tell. Peltz also has other business interests. He is currently non-executive chairman of The Wendy’s Company, sits on the boards of Unilever and Madison Square Garden Sports Corp., the parent of the New York Knicks and Rangers, and is no stranger to pushing his views on companies.

Historically, activism is nothing new. Its roots can be traced back over 100 years ago. In 1906, the federal government filed an antitrust lawsuit against Standard Oil. The case went all the way to the Supreme Court, which ruled in favor of the government. In 1911, the Court ordered Standard Oil to be broken up into 34 separate companies. The breakup of Standard Oil was a major victory for antitrust activists and for consumers. It helped to create a more competitive oil market and lower prices for consumers.