Activist Investors In Retail Stocks Show Negligible Beneficial Impacts

Following the news of Carl Icahn's stake in Family Dollar (NYSE: FDO), it would be worth wild to consider the value added to retailers that have activist investors.  The case has been for the surge in Merger & Acquisition activity being driven by low rates, tax incentives, and an appetite from the big money for alternative assets.  CLO pricing through the month of May buoyed leveraged loan prices to a 10-week high. 

Aside from making headlines and being Wall Street Cowboys, what real benefit does a concentration of activists who stand on soap-boxes and state their actions are merely designed to increase shareholder value?  Apparently only 50 bps in 2014 when focusing upon the retail sector.

Looking across retailers with at least $1B in market cap, the top 20 of those with the highest concentration of activist investors has under-performed a leading retail composite index.  The S&P 500 Retail Composite Index has lost 4.71 percent since the start of 2014 while the 20 leading retailers basket lost 4.21 percent, a spread of 50 bps.  This performance is another shining example that the misunderstood hedge funds are being squeeze for performance ever since volatility fell to recent lows

Using Family Dollar since it is the most recent headline, let us look at it's institutional holders. 

Taking the number one stock when organized by Activist Investor Ownership percentages, Family Dollar leads the pack with 25.48 percent.  Of the company's top five institutional holders, three of them are activist investors:


  1. Icahn Enterprises (NASDAQ: IEP) - 9.393%
  2. Trian Fund Management LP - 7.35%
  3. Paulson & Co - 5.68%

Participants and observers will continue to be exposed to content covering how Icahn and his buddies are doing everything for the shareholders even though the benefits of these guys, specifically in the retail sector, is negligible overall.  45% or 9 of the 20 retailers with at least $1B in market cap & a high concentration of activist investor holdings have posted positive performance for the year.









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