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Sharing current views and opinions showcases the thought leadership we bring to our clients.

Current Views

All Tweets are Not Created Equal

Thoughts from our Domestic Equity Team

We think Shareholder Activism has become a serious market-moving event over the past few years, generally cheering shareholders and fomenting significant trading activity. In our view, social media has become one of the preferred methods of communicating an activists’ game plan to the investing world. It used to be called “talking one’s book”, but now it may more aptly be called “tweeting one’s book”, as adoring fans rush to the shares after a Twitter or other media pronouncement, and immediately the stock price rises, enhancing the value of the activists’ position.

Certainly, there are activists who do their work totally out of the spotlight and see themselves as Robin Hoods, bringing to light wasteful corporate structures and bloated expense ledgers with the aim of helping all other shareholders in distress. Over the years, many companies have come out of these battles stronger, leaner and more competitive; in short, with their activist partners, they have produced striking gains in shareholder value.

But unfortunately we are seeing many of these activists wield their power in different ways, often giving themselves a preferred position or forcing competent managements to make questionable decisions that have certainly not benefited average shareholders. The trick is to figure out which activists wear white hats and which have no more ability to manage a large complicated corporate structure than they often do in picking the right investments in their portfolios, on the long or short side.

At the moment, there are a dozen companies of size (greater than $1 billion of market capitalization) which have been targeted by activists since the start of the fourth quarter of 2013, and all are trading below the levels seen since the start of the agitation campaign. Clearly, there are other situations that have come to light during this same period which are showing positive momentum, but the mere presence of a shareholder activist does not guarantee a favorable outcome. We consider the influence of an activist or a situation that seems ripe for an activist in our investment thinking, but it is just one of many inputs we weigh, and by no means do we think such a factor assures a successful investment, especially without the myriad other considerations we seek in every investment we make.

Submitted by: Robert L. Meyer, CFA – Managing Director and Portfolio Manager



This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.

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The Roosevelt Investment Group, Inc. is an independent investment management firm that is not affiliated with any parent organization. The Roosevelt Investment Group, Inc. manages domestic equity, international equity, domestic fixed income, global fixed income, and balanced assets for primarily U.S. clients. The Roosevelt Investment Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission and notice filed in all 50 states.

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