In a recent interview with CNBC, ValueAct Capital co-founder and CEO Jeffrey Ubben talked about the state of activism investing and shares some general market insights. Here are some highlights from the interview:
- Ubben explained that ValueAct spends a lot of time gaining the trust of company boards and employs a long-term view: “When you have one-year capital, you write letters and get it done…We’re just doing it differently. Some of it is temperament—you don’t like lawyers in your life so much, or whatever it is.”
- On active management, Ubben said, “It feels hard. I don’t know how much of the bid every day is someone who is buying intrinsic value on the other side. It may be a bit of a dinosaur, maybe.”
- When asked whether it’s possible to be a value investor in today’s market, Ubben responded, “I think in the end intrinsic value will win.”
- Regarding ValueAct’s long-term approach, Ubben said, “Because we have long-term capital, we have the time horizon that will allow our thesis to play out. We really tend to make money in year 3, 4 and 5, not in year 1 and 2.”
- On ESG investing, Ubben argued that he has seen a flip in the investing environment from the 70’s, when interest rates were high, and the economy was a “material-short world.” Today, he said, financing is abundant, and taxes are low, so “less returns accrue to the abundant resource. The scarce resource (today) is human social natural capital,” which is where Ubben sees the “breakout” returns coming over the next 20 years.
The type of companies he looks for are those that “think more deeply about environmental, social goals and needs.” Ubben described the electricity grid as the “crown jewel in the clean economy.” The “mega-play,” he said, “is all about the environmental and social footprint.”