Social Media in Activism Tci at Japan Tobacco Kerrisdale Capital Tulchan

Volume 3, Issue 7 July 2014 SOCIAL MEDIA IN ACTIVISM TCI AT JAPAN TOBACCO KERRISDALE CAPITAL TULCHAN ACTIVISM MONTHLYPremium www.activistinsight.com Editor’s letter Josh Black, Activist Insight t may be a touch ironic that the In combative and media-hungry Elsewhere in the magazine this month, print magazine you have in your campaigns of the type Icahn specializes we have an overview of The Children’s I hands is focused this month on how in, Tweets are a journalistic delight, Investment Fund’s long-running activists are using the internet to further requiring little to no editing and campaign at Japan Tobacco. For an their efforts to shake up corporations. often forming a story in themselves. international team, TCI has a very English Indeed, activists are increasingly coming Issuers, which often put considerable patience about its investments, and online in search of new audiences for restrictions on their social media teams has been pursuing the full privatization their ideas, and I hope you’ll agree this and rarely offer much personality, are of the company for years. At a time makes writing about the potential and likely to be caught flat-footed, although when Japan is seeking a revolution in pitfalls of social media a timely move. eBay’s well-orchestrated response to its corporate culture, the steady stream Icahn’s campaign to spin-off PayPal of activism there should be welcome. Our activist interviewee, Sahm Adrangi may prove to be a model for the future. But change has been slow to come. of Kerrisdale Capital, has been As the New York Times reported this publishing his investment research Future week, over 900 Japanese companies online for years. When Barington campaigns hold their annual meetings on the same Capital Group took a stake in Darden may also day each year, ostensibly to make life as Restaurants last year, it did not simply benefit from difficult for investors as for racketeers. upload a presentation to its website the personal touch” but hosted a full-on webcast, led by its For those unable to make the exciting CEO James Mitarotonda. Whether this Now, with Clinton Group’s largely array of conferences in London this practice will lead to greater interactivity “successful campaign at ValueVision summer, we have reports from two that between activists remains to be seen, Media, we may have entered the age of hosted their fair share of discussion but it seems unlikely that activists will video. Given that the company operates about activism. I am personally glad to want to close down any avenue of a TV-shopping network, Clinton Group’s have had the opportunity to speak at communication that adds the oxygen of decision to make a film of its nominees events organized by ArrowCon Partners, publicity to their campaigns. discussing the campaign made sense. IR Magazine and the IR Society this month, and to hear many interesting Twitter became a big talking point in That said, future campaigns may also tales of corporates’ encounters with the activism world when Carl Icahn benefit from this personal touch, even if activists. joined the social network last year, the impact will be less than the famous and as comments from his Community Kennedy-Nixon debate. Personal It only remains for me to say thank you Manager for our feature article make impressions may not be overwhelmingly for reading, and please don’t hesitate clear, he thrives on a crusading spirit important for an investment community to get in touch if you have anything you in his approach to investing. Indeed, used to going through voting decisions would like to discuss. perhaps because they are pithier and at speed, but it could be useful for more personal, Icahn’s tweets are more activists wishing to make a point about [email protected] eagerly awaited than his regulatory the quality of its slate and issuers filings, though they often contain similar wanting to emphasize the openness of information. their boards. 2 Contents Activism Monthly Premium, July 2014 2 Editor’s letter 4 The social activists 4 8 7 London value investor conference A review of the event 8 A vital channel An interview with David Shriver, Tulchan Communications 10 Opportunity strikes An interview with Sahm Adrangi, Kerrisdale 10 12 The growth of activist investing in Europe conference A review of the event 14 Revolt on bankers’ compensation spreading 16 TCI at Japan Tobacco 18 News in brief 20 New investments 22 The activist view 23 Activism in numbers 16 All rights reserved. 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Contributors: William Duncan and Mike Cassell Front cover image: Twin Design/Shutterstock.com The social activists Social media can destroy reputations, lead to product boycotts and send a company’s stock price into freefall. Now, corporations worldwide are waking up to the fact that they could also find themselves under fire online from activist investors who have ousted embattled CEOs, overthrown boards and forced changes in well- entrenched business models. With corporate activism on the rise, companies are realising they may have a yawning gap in their defences; it has become essential that they understand the growing impact of social media—such as Facebook, Twitter, LinkedIn and YouTube, as well as the rapidly multiplying number of investment community websites—in order to devise strategies for responding effectively once they find themselves in the firing line. One panellist at the IR Society summer conference this month told how his firm had used LinkedIn groups to source users of a company’s product in order to gauge customer satisfaction. “MOST INVESTORS STILL OPT FOR THE TRIED-AND- TESTED ROUTE OF A SPOT ON CNBC OR BLOOMBERG WHEN THE OXYGEN OF PUBLICITY IS REQUIRED” ocial media has already activism is on the march, with 67% of Michelle Icahn, the Community become a key component of all respondents expecting use of social Manager at Icahn Capital, told Activist Ssecurities markets, according media to increase in the coming year. Insight recently that her father “chose to Charlie Palmer, Senior Managing And there have already been enough to adopt Twitter and other forms of Director in Strategic Communications wake-up calls to alert businesses to social media such as his website, the in the London office of FTI, who notes the dangers of being ill-prepared. Shareholders’ Square Table, because that Bloomberg includes Twitter in its he firmly believes they will greatly help feed of potentially market-moving news. in his overall mission to highlight and “Activist shareholders increasingly use Companies hopefully remedy the dysfunction of social media to break market-moving can Corporate America.” She added that news. Carl Icahn’s Tweet about a increasingly Carl, who has been vocal in his belief meeting with Tim Cook of Apple added expect such that institutional investors are too quick around $17bn to Apple’s market cap,” fights to protect their to walk away from stocks rather than he says. Activism is comparable to reputations” lobbying for change, believed “that hostile M&A and is delivering the kinds through the various social media of superior returns that make investors “In August last year, long-time activist platforms such as Twitter, Facebook, sit up and take note, but issuers are and billionaire investor Carl Icahn used Tumblr, etc available today to American behind the curve. “Companies are often Twitter and Facebook to repeatedly investors and pensioners, [investors] not prepared to deal with activists and call for Apple to expand its stock can easily be made aware when their initial response, which is critical, is buy-back programme. He backed off management is doing a very poor job poorly thought through often leading to when the company went some way and nothing is being done about it.” an escalation of the situation,” he adds. to meeting his demands; but more recently he increased the intensity of Even so, there are pitfalls for activists There is now every indication that his online activism at eBay, blogging to be wary of. The press reckoned that companies can increasingly expect furiously and inventing the hashtags, a stray tweet cost Icahn around $2,000 such fights to protect their reputations. #notworldclass and #spinpaypalnow when he failed to notify the SEC he was A recent survey by Activist Insight and to promote a partial IPO of payments commenting on Dell and was forced FTI Consulting confirms that online arm, PayPal. to instruct lawyers to make a hasty securities filing or face the regulator’s wrath. A selection of Icahn’s top tweets With costs so high, you might be @Carl_C_Icahn 13th Aug 2013 forgiven for asking why activists bother using social media. Admittedly, most We currently have a large position in APPLE. investors still opt for the tried-and- We believe the company to be extremely tested route of a spot on CNBC or undervalued. Spoke to Tim Cook today.

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