Paul Singer’s Elliott hedge fund is undoubtedly one of the most aggressive activists in Germany. Those responsible at ThyssenKrupp, SAP and Bayer can sing a song about this. “Spreading fear, cashing in, moving on,” is how former Siemens boss Klaus Kleinfeld describes the strategy in the current issue of Capital. The problem from the point of view of supervisory boards: The Singer squad knows how to put their finger in the wound and pull allies to their side. Thus, they repeatedly make common cause with institutional investors who are officially long-term oriented – but who also have nothing against higher dividends and price gains.
Elliott creates psychograms of supervisory boards
This can result in dangerous coalitions at the expense of other stakeholders. Sometimes it would be better to invest the money in the future for the good of the company. It would therefore be all the more important in such cases for the Supervisory Board to be composed. But be careful: “Part of Elliott’s Playbook is to split the board and drive a wedge between board and management,” reports Kleinfeld. “They’re creating psychograms of all the members.” This shows impressively how important independent supervisory boards are (in the sense of the VARD professional principles). On the other hand, controllers who are also investors and thus profit from short-term price increases are likely to be particularly susceptible to Singer’s advances. We therefore reaffirm our call to strengthen the independence of supervisory boards. Minority shareholders do not think and act like owners – and should therefore remain in the passenger seat.