Carl Icahn: BlackRock is an extremely dangerous company – Fortune 07-15-15

Salient to Investors:

Carl Icahn said:

  • BlackRock have fueled a bubble in the high-yield debt market through the sale of ETFs filled with risky bonds, akin to the banks selling billions of dollars of faulty subprime mortgage bonds in 2007. The ETFs offer the appearance of liquidity and make the high-yield bond market seem safer than it is.
  • Credit default swaps in high-yield bond funds make the liquidity problem even worse.
  • The high-yield debt market is overvalued – expect losses in oil and gas high-yield bonds.

Larry Fink at BlackRock said:

  • There could be some losses in high-yield debt but there won’t be a crash. There are no similarities with the market in 2007, not nearly as much leverage in the system as then, particularly at the banks.
  • Icahn’s criticism of Blackrock is baseless. Studies show that ETFs increased liquidity in the markets, not the opposite.

Read the full article at http://fortune.com/2015/07/15/carl-icahn-blackrock-is-an-extremely-dangerous-company/

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Activists Beat S&P 500 in 48 Percent Gain for Shareholders – Bloomberg 03-14-14

Salient to Investors:

  • Corporate activists including Carl Icahn, Bill Ackman and Nelson Peltz targeted 81 US companies with market values exceeding $1 billion between 1/2009 and 12/31/2013, generating a 48% average gain for long-term investors versus 31% for the  S&P 500.

Read the full article at http://www.bloomberg.com/infographics/2014-03-31/activists-beat-s-p-500-in-48-percent-gain-for-shareholders.html

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Activist Funds Loaded With Capital Augur Dealmaking Surge – Bloomberg 01-17-13

Salient to Investors:

Hedge Fund Research said $3.8 billion went into activist funds in 2012 versus $1.8 billion in 2010. Factset Research Systems said shareholder activists started 219 campaigns in 2012 versus, up 22 percent from 2011 and the most since 2008.

Patrick Ramsey at Bank of America said we have seen a dramatic increase in shareholder activism, which will help increase M&A in 2013.

Anne Simpson at the California Public Employees’ Retirement System is putting $1.25 billion over the next five years into a fund of its own.

Mazin Jadallah at AlphaClone said activist funds returned 25 percent in 2012 versus 13 percent for the S&P500.

Carl Icahn said you need a large amount of long-term committed capital to be successful.

Gideon King at Loeb Capital Mgmt said the financial crisis has left a substantial price gap between sellers and buyers. Gene Sykes at Goldman Sachs said mature tech companies laden with cash are especially ripe targets.

Andrew Bednar at Perella Weinberg  said activists sometimes claim too much credit because there is often not a cause and effect between activist action and management decisions. Ralph Whitworth at Relational Investors said that it’s true that management has often heard similar suggestions from bankers, investors or analysts, but an amazing number suffer from the ready, aim, aim, aim syndrome.

Read the full article at http://www.bloomberg.com/news/2013-01-17/activist-funds-loaded-with-capital-augurs-dealmaking-surge-1-.html.

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