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13D Monitor founder and president Kenneth Squire on how “activist investing” can give your portfolio an edge.
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-- -- thirteen.
Of activist investors and it's up more than 20%.
Over the past year.
Here with the fundamentals Ken -- thirteen.
You're following these big money makers were gonna talk about pro life come that you can't mentally just 122011.
And you've gained about 30% since the -- up over 21% in the first -- -- -- 14% this year and this is just following what the what you think the plays are going to be today from -- -- but in the strike on the.
Oh it's more than just -- I can be refile followed maybe ten to fifteen different activists.
And twenty to forty positions and we're analyzing the event who the activist is what -- track record is.
What strategy they're employing what are their chances of success what sector basically.
And analyze the entire event why -- this a good strategy.
And it's a good exit strategy because it's it's non correlated.
It out performs historically activism is outperform the markets and and you know the best -- -- you've -- -- before more out give an example Blackmon recently.
Said in an article that 55% just put Foley is activist situations and that 55% generates 90% of its profits.
So he is limited numbers are where the numbers -- Donald.
Chance of success -- following their strategies obviously you're following the names that there jumping and 21 in particular type what corrective move.
The bill up and make for example that you think signifies.
A good -- just for the rest of us well it.
We look at -- his track record in the sector he's investing in we look at who's who of the shareholders what is he trying to do.
And and when when we think his chances of success based on who the shareholders on how likely didn't support him.
A look at the company's do you like right now there's a lot of companies that in the obviously Herbalife has been one of the big -- -- big headline makers.
But what types of companies do you look right now they're looking.
Who we like companies that are that that stable cash flow.
That a good businesses that -- that have an upside catalyst that the activist is bringing to do it to the table like it like for -- sign equities a perfect example of that the I hop and apple.
These chain they just they just went through huge franchising initiative to the 99% -- it's basically just of royalty stream coming into the company and mark -- capital management the activist.
This is urging them to pay a six dollar share dividend with -- with a 5% yield which is which is normal for that industry is a 120 dollars.
Why would I want to go despite days -- particular.
These particular stocks why would I do this in a fund purses well you admit there's lots of reasons doing the funds in the -- has.
Different styles different activists and and different different sectors.
Would diversified in that -- secondly activism is often Jacobson it's goes down sometimes the -- goes up depending on the type of activism.
The fund has different different activism different -- situations and different parts of the life cycle so that -- curve doesn't really happen as.
You gotta be ready if you're gonna do this you gotta be ready for -- vault holding my head -- -- stopped well outside of the fund outside it looked outside of the fund it is visible this in the can be volatile and you're not going to be right a 100% of the time so you should do any type of investing in -- portfolio okay let's talk about investors the following night I -- a couple of -- obviously Carl -- is -- -- a lot -- -- -- -- -- Not as well known names Markota -- I -- core axis.
Is Steve Meister who was -- call -- right hand man started his own fund.
I'm mark cattle is Mick McGuire who was -- -- -- right hand man he started his own fund so they there there's a lot of new guys coming out that there aren't as well known.
You know what we were talking about not recall icon in the herbal life story in their pitted squarely against each other.
And that type of battle of the seven -- have been that you're gonna stay away from that it wants sailing if you look at this.
Away from that.
And that's really hasn't happened in the seven years that I've been following activist situations and I'm not sure it's gonna happen like this in the next seven years.
But you know we respect -- very much respect -- very much and we would never never take -- -- against either one of them woody didn't know you know -- like what makes him tick date.
And she's just investing he just loves what he does he loves he loves to make money he loves looking at companies just did not -- Making money and investing I think is really is really what he's -- -- making money but also I mean he -- a lot of -- controversy.
Well yeah if you -- him that all active -- hello all activist create controversy and you know most activist at least and that's that's that's the nature of the -- do you think that there's a particular sector it can be an Olympic -- right -- I -- the -- -- -- but -- -- there's a particular sector right now those kind of ripe for picking when it comes activism.
Well technology is always been the top sector and it's been it's been for you for the last five years or so it's been the number one and number one -- -- -- -- -- And partly because a lot of these technology companies they have successful core businesses and then they spend a lot of money in research and development as teenagers -- other businesses.
And activists come in and and try to get them to use of cash and a more efficient manner.
Well again you know it's it's it's saying it's a can be risky but you're spreading it out diversifying with the funds so they got -- --
