Tags: Icahn | Ackman | Insana | raiders

Ron Insana: Icahn, Ackman Represent Reprise of 1980s Corporate Raiders

By    |   Wednesday, 07 May 2014 09:49 AM

Activist investors of today like hedge fund heavyweights Carl Icahn and Bill Ackman are no different than the corporate raiders of the 1980s, who also included Icahn among their number, says Ron Insana, a contributor to CNBC.

In the 1980s, Icahn and the others "raided corporations that were unloved, or undervalued, while promising to unlock shareholder value . . . a noble effort which they claimed would enrich the average investor," Insana writes in a commentary for CNBC.

"In truth, they levered up cyclical companies, raided their overfunded pension plans and, in many cases, drove companies into bankruptcy after using a company's own cash to engage in a multitude of strategies that aided the raider, but pilfered the company's coffers."

Editor's Note:
38 Trades That Could Turn $1,000 Into $49,000


Now raiders are at it again, Insana argues. Some are old like Icahn, and some are new like Ackman, although there are some that "are legitimate 'activist' investors who seek to improve the quality of the businesses they target."

"What they are really doing is simply putting a new spin on the type of financial engineering that was pioneered some three decades ago," Insana says. After a 10-year feud, Icahn and Ackman say they now may work together.

"A shudder should run down the spines of all God-fearing CEO's who will now be distracted by these opportunists," Insana writes.

Charles Munger, vice chairman of Warren Buffett's Berkshire Hathaway, doesn't think too highly of activist investing either. The strategy is causing more tumult "than anything has in years," Munger said last weekend at Berkshire's annual shareholders meeting, Bloomberg reports.

"I don't think it's good for America."

Editor's Note: 38 Trades That Could Turn $1,000 Into $49,000

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Activist investors of today like hedge fund heavyweights Carl Icahn and Bill Ackman are no different than the corporate raiders of the 1980s, who also included Icahn among their number, says Ron Insana, a contributor to CNBC.
Icahn, Ackman, Insana, raiders
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2014-49-07
Wednesday, 07 May 2014 09:49 AM
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