News that activist investor Bill Ackman’s Pershing Square is going after Procter & Gamble (NYSE: PG) has certainly rekindled interest in what was growing (or declining) into nothing more than just another dead mega-cap DJIA component. We highlighted last week that perhaps the market reaction was just too strong for too little evidence of anything concrete.
We have asked our readership to play arm-chair activist here and take a poll on what strategies would be best for how to turn around a behemoth with a market capitalization rate of more than $175 billion. That poll is below, and it even allows an “other” answer which you can customize.
We have noted previously that trying to force change in giant companies is difficult. The latest report is that Ackman has taken a 1% stake worth close to $2 billion. For traditional 13D filings to have any meat they generally require a stake of 5%. The problem is that a 5% stake is now worth close to $9 billion. Carl Icahn went after The Clorox Company (NYSE: CLX) unsuccessfully in the past and new investors can now get the same dividend yield offered by Kimberly-Clark Corporation (NYSE: KMB). Is it worth noting that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) has been winding down his giant P&G stake from the old Gillette days.
Howard Davidowitz has now recently said that Ackman should stop trying to run companies and Yahoo! Finance has shown some other strategies as well.
Again, take the poll above… We plan on sending it out to the activists.
Kimberly-Clark hit yet a new high today as evidence that a great dividend bubble is forming: shares hit $85.93 versus a Wall Street value by Thomson Reuters of $79.00. P&G shares are up about 6% from the base when the Ackman news began to surface, and shares being up 0.8% at $65.35 are running into the same resistance levels they ran into last week.
JON C. OGG