He dislikes them.

Just read the title of this week's critique of the activist project at GM:

 General Motors' Stock Buyback Follows a Worrying Trend 

We naively thought the worrying trend is corporations hoarding cash, and shareholders needing to press management to return excess, unproductive capital. Ha!

Instead, Steven Davidoff Solomon removes any doubt about his loyalties. He worries about an investor "shakedown", in which "financial engineers" in "spreadsheet-laden war rooms" push "financial engineering" to "generate immediate returns".

Once again, he adopts an eschatological view of a straightforward yet interesting activist situation. The GM situation represents a "turning point" in "good times" that "inevitably end" and "washout companies and shareholders", "led by the activist stampede." So, activist investing that prompts a share buyback also can cause a recession? or the end of the world?

He wanders around various arguments around how much cash a company needs, without understanding or even stating clearly any of them. He concludes "[t]he vibrant debate shows the pros and cons of share repurchases, but GM was apparently unswayed by the cons." Or maybe persuaded by the pros?

GM itself concludes it can afford a $5 billion share repurchase, in a thorough and thoughtful analysis. Shareholders agreed, and walked away with nothing more than a promise to follow-through, without a BoD seat to oversee the process.

We wonder: instead of a shakedown, did GM investors force it to think hard and critically about its cash needs? We think the latter, and can get behind that trend.

MRL

Each day, BoDs and executives treat us activist investors worse than the prominent reporters in two major newspapers did last week. We expect it from CEOs and their minions. 

We expect writers only to get the facts straight, reach conclusions based on logic and reason, and handle all sides fairly. Neither Dennis Berman in the Wall Street Journal nor Steven Davidoff Solomon in the New York Times did that in their recent hit pieces on activist investing. 

Not surprisingly, corporate flunkies such as Stephen Bainbridge loved it. And, Solomon has an unfortunate habit habit when he chronicles activist investing of botching facts, reason, and fairness, so this latest episode doesn't exactly surprise us.

See our current blog post for a critique. 

Recent TAI blog posts

The New CEO Activist Hedge Fund Makes No Sense (1/29/15)

Shareholder Enragement, Continued (1/22/15 email)

Does Marty Lipton Even Read the Stuff He Sends to Clients? (1/20/15) 

What Did An SEC Commissioner Just Do For Classified Boards? (1/13/15) 

Letter to New York Times writer Gretchen Morgenson on proxy access at Whole Foods (1/8/15)

What Did Whole Foods (and the SEC) Just Do to Proxy Access? (1/6/15)