Donald Drapkin On Activist Investing And Hillary Clinton

On this week's Wall Street Week, Casablanca Capital founder and co-CIO Donald Drapkin sat down to discuss many things financial. At one point, Drapkin was asked about activist investing, why it makes sense right now and how investors benefit from it.

The investor assured that the theory about investors not benefiting from activist investing is “a lot of nonsense (…) It’s a little bit like the late '70s and early '80s when the takeover boom soared in the United States,” he explained.

What Activism Is

“Activism is only one step removed from the takeover boom, which is that everybody…instead of bidding for the whole company, you go in.

Related Link: Donald Drapkin Explains What Is Going On With Cliffs Natural Resources

“But you don’t go in because you want to lose money; you go in because you want to make money for shareholders.”

He continued, “Some activist deals are good, because the people who shake things up have done a good job.

“Everybody wants the long term to be good, but there are things you can do in the short term to make the company better, and that’s all anybody wants to do.

The Clinton Issue

Hillary Clinton recently said that activist investors go into companies to create short-term profits and do not really care about the long term or creating jobs or making the overall economy stronger.

However, Drapkin assured this is not true. Clinton’s depiction of “quarterly capitalism” and “hit-and-run” activism is wrong and shows a “complete lack of understanding of the financial markets,” he pledged.

An activist (at least one who is a good guy, and informed) goes into a company “to create jobs” and put money in the shareholders’ pockets – “not sacrificing the health of the company,” he added.

“Management forgets that shareholders own the company; not Hillary Clinton (…) and not some mythical long-term investor,” he concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.