Tuesday, February 17, 2015

Trian vs. DuPont - Round 3

Nelson Peltz and his Trian Partners Group is still dogging DuPont. Having lost the last round (when DuPont explicitly told him that no, he cannot be on the board of directors and that DuPont was going instead add 2 more of directors of their own choosing), Peltz is still hoping a proxy fight will get him the directorship he so craves. And just like what Daniel Loeb did when he was attacking Dow, Peltz now has his own website, dupontcanbegreat.com [*]. His nominees for 3 other director chairs are rather scary, all being financial guys. (It takes more than fancy financial manipulations to effectively manage a company. See Google, Apple, Amazon, IBM and 3M for counterexamples. See Enron, Bears Stearn and Bernie Madoff for examples of how financial numbers that look great can end up being a complete fraud.) But even more so, I wonder about Peltz himself.

His only experience in running a chemical-type company was Avery from 1984 until 1992 and the results weren't too impressive. In early January of 1984, Avery stock was around $6.50 while at the end of 1992, it was around $13.88. While a 214% gain seems impressive, the S & P 500 rose 260% during that same time frame. Meaning he couldn't even keep pace with the general market. I think Peltz would call that underperformance, but he still thinks he has great advice on how to run DuPont.

Again, I don't follow DuPont's business performance too closely and maybe they do deserve to improve, but I really am bothered by this activist investor approach. If you own stock in a company that is stinking up the joint, then you may try and hype it up some in order to get the price to rise. But the activist investors aren't hyping up DuPont. They are trashing it in about every way possible. All of which raises this question:
"If the company is really that badly off, then why would anyone ever buy up such a large share of it?"

[*] Dupontcanbegreat.com? Couldn't someone have spent more than a few seconds coming up with that grade-school level name? And these guys think they have great advice on how to run the company?

Previous Years

February 17, 2012 - Reusing Old CD's - but for Artists Only

February 17, 2011 - A Single Phase Gel from Buckyballs?

February 17, 2010 - Potpurri

February 17, 2010 - Twitter

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