When I think of activist investors, Carl Icahn and Bill Ackman always come to mind. While you could argue that Ackman doesn’t practice activism often, the duo’s battle over Herbalife (NYSE:HLF) started in 2012 and continued for several years. There was even a documentary made about the fight between the billionaires.
Ironically, Icahn’s firm Icahn Enterprises (NASDAQ:IEP) is now on the receiving end of an attack by well-known short-seller Hindenburg Research. According to Bloomberg:
“Icahn has been using money taken in from new investors to pay out dividends to old investors,” Hindenburg said in the report. “Such Ponzi-like economic structures are sustainable only to the extent that new money is willing to risk being the last one ‘holding the bag.’”
While I do not include Icahn Enterprises in my list of three stocks that activist investors may need to swoop in and save, you could make the case based on Hindenburg’s report.
Instead, I’ve sought out three other names that ought to be on activist investors’ to-do lists.
| NWL | Newell Brands | $8.89 |
| VFC | VF Corporation | $20.77 |
| TSN | Tyson Foods | $49.97 |
Newell Brands (NWL)
Once upon a time, long before Newell Brands (NASDAQ:NWL) became a conglomeration of more than 100 consumer brands, it was a good company.
In 1999, Newell Co. acquired Rubbermaid for $5.8 billion in stock after Rubbermaid’s long-time CEO, Stanley Gault, retired. The company went downhill quickly, so Newell pounced.
Newell had spent three decades buying over 75 companies. Its game plan has always been to acquire a company, cut costs, raise margins and deliver shareholder value. In the case of Rubbermaid, Newell management said at the time that they would add $300 million to $350 million in operating income by 2000 due to the buyout.
In 1997, Newell had operating income of $572 million. By 2000, it had an operating income of $832 million — up $260 million but not quite hitting the mark — on $6.9 billion in revenue. Two decades later, Newell Brands’ 2022 operating income was $312 million, less than half its 2000 figure, on $9.5 billion in revenue. So, while revenue is 38% higher than in 2000, the company is far less profitable.
Ironically, Icahn brokered a deal in April to end a proxy battle with hedge fund Starboard Value. Some other activists ought to pick up the torch. Down 66% in the past five years, Newell could just be the worst stock in the S&P 500.
VF Corporation (VFC)
VF Corporation (NYSE:VFC) is an apparel conglomerate with well-known brands such as Vans, Timberland, The North Face, Supreme and Dickies.
The company has faced little activism over the years. However, it did take some heat in 2018 when it banned a shareholder from the annual meeting. Other than that, it’s been pretty quiet.
However, VF’s stock is in a freefall. Down 25% year to date, 57% over the past year and 72% over the past five years, a $10,000 investment in May 2018 would be worth just $2,800 today.
In early May, VFC stock got a bit of a boost when Wells Fargo analyst Ike Boruchow upgraded it from “sell” to “hold,” suggesting that the problems that plagued it were in the rearview mirror. Boruchow also said that its Vans sneaker brand, which until 2022 had been the company’s strongest performer, was on the mend. And he suggested the company’s dividend cut will likely help it fund future growth.
That’s all well and good, but when a stock has performed as poorly as VFC, something must be done before shareholders see all of its value evaporate. Perhaps activist investors are the answer.
Tyson Foods (TSN)
How is it that Tyson Foods (NYSE: TSN) Chief Financial Officer (CFO) John R. Tyson still has a job while 10% of the company’s corporate staff will lose theirs?
Tyson was arrested in November for entering a stranger’s house while intoxicated and sleeping half-naked in one of the bedrooms. Apparently, getting drunk and sleeping it off in the wrong house isn’t cause for dismissal, but being the poor sap whose name is selected out of a hat as part of a job reduction plan is.
Tyson is the largest processor of chicken and beef in the U.S. Its brands include Jimmy Dean, Hillshire Farms, Ball Park and Sara Lee. The company reported an operating loss in the second quarter of $49 million, down from a $1.16 billion operating profit a year ago.
Meanwhile, shares are down nearly 20% YTD, 46% over the past year and more than 26% over the past five years.
Like the other two names on my list, you would think activist investors would have a field day with Tyson. It’s got some well-known brands and a key position in America’s food chain, yet it continues to sputter.
Unfortunately, the Tyson family has a 20% economic interest in the company and controls 71% of the votes. However, just because you can’t take down the Tysons doesn’t mean you shouldn’t try.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.