Spinoff Odds & Ends: Activist Investors, DuPont

A few short hits for the end of the week…

  1. The WSJ busted out an activist report card analyzing the results of ‘what happens to large U.S. companies after an activist arrives’. Naturally, the outcome is ‘mixed’. That said, it’s certainly an interesting data set to parse through and one is able to sort by activist or by industry. Activist investing has been one of the big drivers in the growth in corporate spinoffs and is becoming quite popular as an investment ‘style’. Of course, being ‘popular’ can also have drawbacks such as becoming a talking point during presidential campaigns, but for now, it seems to only be getting more and more popular.
  2. Continuing on the activist theme, Ellen Kullman stepped down as CEO of DuPont (DD) this week. Earlier this year, Nelson Peltz’s Trian Fund picked a fight at the chemical company, urging it to break itself up. Ms. Kullman resisted the fund and ultimately, narrowly won a shareholder vote, theoretically giving her security to pursue her mandate. The company soon completed the spinoff of Chemours (CC) which has totally, and as many predicted, tanked. A bigger problem for Ms. Kullman has been that DuPont’s earnings have also suffered. Of course, that isn’t a surprise given the difficulties in its operating markets, but a disappointment is still a disappointment. Put those together and less than half a year after her rousing victory, she is ‘mutually leaving’ the company. Talk about short-termism. The WSJ notes that her interim replacement, Ed Breen, has a history of presiding over breakups leading many to believe the company will pursue Mr. Peltz’s suggestions. How is that for losing the battle, but winning the war?

Disclosure: Author holds no position in any stock mentioned.


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